Wednesday, 21 February

The Vehicle Emissions Tax in Retrospect; Why NPP and Dr Bawumia should never be given the opportunity to come anywhere near the management of Ghana's economy

Feature Article
Emissions levels

The government of Ghana under the Economic Management Team led by HE Alhaji Dr. Mahamudu Bawumia has imposed a Vehicle Emissions Tax (VET) on all motor vehicles to raise additional tax revenue to dig out the economy from the ditch.

All things considered, the government is expected to raise an amount of $40m annually.

If the $2b IMF/WB support is not enough to pull Dr Bawumia's economy out of the ditch but a meagre $40m is what is needed, then the economy is truly in a more dire straits than anyone could ever contemplate.

The dynamics of Public Policies come with complexities in the area of options and trade-offs.

This requires careful thinking to arrive at what the best possible options should be. You cannot just conceive of a policy such as this and proceed to implement it without thoroughly thinking through it.

In as much as Public Policies are supposed to enhance productivity, growth and development of businesses, this tax handle particularly will destroy thousands of businesses, loss of jobs with negative consequences on the struggling banking sector.

Governments use tax policies not only for revenue generation but also to direct consumption of goods, services and the general direction of the country. 

As it appears now, Dr Bawumia and his team are completely tired in their heads and have no clue about the implications of their policy choices on the citizens, businesses and the entire economy.

There's a subtle illusive objective to clean up the environment.

That means citizens are being punished for using vehicles that emit.

That's to say that, we must discard our current diesel/petrol vehicles for electric cars, otherwise we'll be subjected to Dr Bawumia's tax punishment.

Cars, for most people today, have become a necessity, and not a luxury.

So, the first question Dr Bawumia and his team must answer is, where are these electric cars being sold in Ghana to be bought by the ordinary man if he/she has the money? 

How much are these electric cars being sold for?

This question is relevant because most Ghanaians don't buy brand-new cars off the shelves. We buy slightly used cars (pre-owned vehicles) because of price.

The electric cars aren't available in this option as of now.

So, for now, every vehicle user must suffer the punitive tax (emissions tax) that's why vehicle users are up in arms against this tax.

We are effectively being told to discard our current diesel and petrol vehicles.

The question is if the government is directing me to discard my emitting vehicle, who am I going to sell it to? Because everyone else is being encouraged to buy an electric car, I'll have to discount my car to get a buyer to offload it.

On a personal level, I'm losing value because of this policy.

AUTO DEALERS AND GARAGE OWNERS IN GHANA

Auto dealers who took bank facilities running into millions of dollars and imported diesel and petrol cars into their garages risk being stranded as they may have difficulty selling them because the government says everyone must move to electric cars. As loans accrue interest against the backdrop of low sales, they will lay off workers.

BANKING SECTOR 

From the aforementioned, significant quantities of unserviced loans could lead to impairments/bad debts with the potential to trigger a banking crisis.

Why will anyone implement such a policy to raise a paltry $40m with great potential to cause this amount of harm to sections of the economy? You do not chew up your tongue because you crave khebab.

It is only ignorance of public policy, tax revenue desperation or downright incompetence that may lead a government here.

FUEL STATIONS

With the push for electric cars to save the environment, we hope the government expects all current diesel and petrol filling stations will fold up, lay off workers and dismantle their expensive infrastructure against the heavy investment costs (Bank Loans) which some are yet to recover. 

This is yet another effect on the banking sector. Perhaps the government sees an easy pathway to converting filling stations to electric car filling points.

ELECTRIC CAR FILLING POINTS 

Let's even, for a moment assume that electric cars are available and cheap for Ghanaians to buy: let Dr Bawumia and his people tell us where the electric fuel infrastructure is in Ghana. Are such facilities sufficiently available in the country?

Again, do we have enough electricity generation capacity to meet the demands of electric cars without causing electricity supply shortfalls/disruptions (dumsor)?

ABOSSEY OKAI TRADERS & MECHANICS

Mechanics and spare part dealers of Abossey Okai, Suame Magazine etc, which have traditionally supported NPP stand to be hugely affected by this poorly thought-through policy.

Used cars parts traders in this category deal in petrol and diesel parts.

If the economy begins to reject diesel and petrol cars in favour of Bawumia's electric cars, it invariably means that sales of the parts imported by Abossey, Okai Suame Magazine etc guys will drop.

Their investments could even disappear with massive job losses.

Will the proponents of this tax extend this same punishment to outboard motor vehicles being used by our hardworking Fisherfolks?

It looks like that's the direction of this government because they are also, vehicles that emit.

What about those massive GenSets that often come alive emitting fumes in factories, offices and homes each time our lights go off.

What about the smoking chamber police vehicles on our streets.

Will they pay? 

This whole tax is one that is being arbitrarily and capriciously applied. No equity in the application.

Why should a fairly brand new efficient car pay as much emission tax as the 40-year-old bus running Odorkor-Circle?

In most countries where emissions tax is in force, vehicles are tested for their emissions, and the fumes are measured and charged accordingly and proportionately.

In some cases too, the vehicles are changed only when they move into certain pre-defined territories.

Our leaders should for once, pause and think.

Ghana is one big contradiction. On one hand, we are busily exploiting our natural resources, selling out oil blacks to investors, earning millions in oil revenue, setting up and commissioning oil refineries and on the other, developing policies to discourage the use of petroleum fuels.

Our leaders are a complete sellout that seems to be following the metropolitan slave masters sheepishly and implementing their recommendations without thinking about their implications.

In all known development theories, there is no country that has developed without first, industrialising.

It is worth noting that industrialization comes with emissions.

But after they have achieved the end of industrialization, they have managed to convince our leaders that emissions is not good.

We should not go through that route. 

Our leaders have swallowed it, hook-line-and-sinker.

Did they even ask themselves, how much of a pollution a country like Ghana emits?

Let's wake up

 

Source: Bernard Oduro Takyi & Sulleyman Abdul-Wahab