If you own a car, it means you can pay a bit more tax Mahama

President John Dramani Mahama has justified recent taxes imposed on petroleum products.

He says the measure, described by many as senseless and insensitive especially because world crude prices are at 12-year low, was necessary even if bitter.

The president was answering questions from journalists on a wide range of issues at the Flagstaff House in Accra, Tuesday, January 12, 2016.

“Utilities have accumulated debts over the last almost 15 to 20 years and as a result of this accumulation of debt, it has choked the credit lines of the utility companies to an extent that VRA (Volta River Authority) today cannot go to any bank and establish because I think they owe virtually every bank in Ghana.

“As the line got choked here, they went and opened a new account in another bank and then they will take the credit until it gets choked then they open a new account with another bank.”

He said “if we want a sustainable power sector we have to deal with that debt, you must deal with that debt.”

“And how are we going to deal with that debt?” he asked, conceding quickly that, “I don’t have that money, if I had I would pay on behalf of VRA.”

He said government needed to find money to deal with the power generator’s debt even though it has been variously argued that the biggest debtor to the VRA and power distributor, ECG, is government itself.

“…we need to take that money from somewhere and so the point is at a time when God has blessed us to have the price go down by 37 percent, we take a little money and say ‘look, let’s all contribute and pay off this debt because we all used that power that VRA generated,’ I don’t see what really we have done wrong,” the president explained.

He said a portion of the energy levy is going to Road Fund which would be distributed to road contractors, majority of whom are local companies which would create jobs.

The president expressed regret, that 70 per cent of the population does not know they have to pay tax and so the only way to collect tax is indirect tax.

“The only you can raise money, really, is through the tax system and the only you can get everybody to contribute is through indirect taxes and indirect taxes include consumption of petroleum products and those who consume more, if u have a V8 and you buy more petrol, then you are paying more tax. If you sit in a trotro you are paying less tax because 15 of you in the trotro using the same fuel.

“In any case, for the vulnerable in society, transport fares have not gone up.

“For most of us, I mean if you are able to drive your own private alone to vehicle to work and back, then you show that you have an income that you can contribute a little more than the person who sits in trotro,” he stressed.

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