Business & Finance EXPRESSIONS INDUSTRY Opinion

SURVIVING IN A TAXING NATION

It was always inevitable, wasn’t it? The moment dumsor started to become more sor than dum, electricity prices went up at such a rate that you would be forgiven for wishing for the days of dum.

The recent increases in utilities by the Public Utilities Regulatory Commission (PURC) of 45% – 50% for electricity tariffs and 67.2% for water tariffs have already started to hit Ghanaians hard. This is especially when one considers the crippling effects of a power crisis that is yet to fully end and an economy that is yet to fully recover from the effects of the Ghana Cedi’s depreciation against the U.S Dollar.

When these are coupled with the increases in petroleum products due to the introduction of the new Energy Sector Levy, it is no wonder thousands of Ghanaian workers trooped to the streets under the auspices of Organised Labour to express their frustration at the sudden burden they have to bear. One cannot help but think of how this affects the 24.2% of Ghanaians who, according to 2014 Ghana Living Standard Survey report, live in poverty since hikes in utilities and petroleum products usually cause a corresponding increase in prices of other goods and services ranging from food prices to transport fares.

Despite all these challenges, it must be admitted that government is perfectly within its rights to raise the prices of utilities and petroleum products especially when one considers that falling crude prices in the international market reduce potential revenue for the government from that industry.

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It is also no secret that the Electricity Company of Ghana (ECG) and Ghana Water Company have constantly complained about the rising costs of production and the shortfall between the prices consumers pay and the amounts the companies need to sustain and improve production levels. In fact, when one considers that the Electrical Utilities requested for an average increase of 128.6% in prices while Ghana Water Company requested for an over 400% hike in water tariffs, the difference between what they need to keep running and what they eventually get must be appreciated.

The PURC states that it consulted with consumers and key stakeholders before the present rates were approved and it is difficult to see a more important stakeholder than consumers themselves. Thus, it would be advisable to consult them in subsequent meetings to reduce the frequent spate of strikes and demonstrations that are beginning to become a norm and are detrimental to the nation. Schools and public offices close down for the duration of these activities, thus affecting school curricula as well as contributing to the loss of revenue.

The fact that electricity and water tariffs have gone up by almost 150% in the last three years, according to Citi FM, shows consumers are slowly beginning to be overburdened especially when ECG claims the government owes it in excess of 500 million Ghana Cedis. If the government is going to impose such tariffs on its people, it must set a good precedent by paying its debts. As one of the biggest debtors of the ECG, the government could help ease the burden that comes with electricity generation.

Ultimately, however, tariffs and petroleum prices can only be increased for so long before they become untenable. Alternative forms of revenue generation need to be considered. Ghana’s economy is still largely based on agriculture, and the ¨oil rush¨ should not detract from the benefits that agriculture still offers to this country.

Author: Senam, threesixtyGh Writer

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