As expected, implementation of the new VAT code has been greeted with loud protests. It reminded me of the famous quote by the 18th century British statesman Edmund Burke: “To tax and to please, no more than to love and to be wise, is not given to men.”
Indeed, all taxes are inherently unpopular. What I don’t understand is why we don’t make as much noise when the government is expanding unsustainably- and stand by as we watch the political elite burst the budget by devoting a disproportionate share of taxpayer money on buying expensive limousines.
Tax and spend has been the unspoken mantra of the government for the last ten years. VAT is only one side of the issue. The other side of taxation is the spending done by the State. And here things are really out of control. The government has become too big and hence the pressure for more revenues.
That is why as we debate the impact of the new VAT regime on consumer prices, we must also look at the expenditure side as well. Indeed, the elephant in the room here is the ballooning of government spending. This is how we have ended up with the VAT code we are now complaining too loudly about.
Broadly and looking at the numbers, here is how the government spends the money it collects from us. The largest share of our taxes is consumed by the political sector, namely Parliament, the presidency, the Judiciary, constitutional commissions, ministries and departments dealing with administration.
We also know that a far greater proportion of this money is consumed in wages, expensive cars and grotesquely furnished offices.
The second largest consumer of our taxes is the category known as Consolidated Fund Services, money spent on servicing public debt, pensions, statutory obligations and salaries of holders of constitutional offices.
The public debt has risen unsustainably to 54 per cent of the GDP. The third category are autonomous government agencies such as public universities, public funded research bodies and parastatals, including regional development authorities.
The pertinent question, therefore, is the following: should it, really, surprise that there is more and more pressure on the government to raise more tax revenues.
Clearly, the oppressive the VAT regime we are now complaining about is just but the price we are paying for allowing the budget of Parliament, the Judiciary and constitutional commissions to expand almost five-fold in just over five years.
Today, the parking lots of Parliament and the Judiciary are a theatre of obscene opulence. Displayed there are expensive four-wheel drive vehicles and limousines purchased at the expense of the taxpayer.
We are a country of major contradictions. We don’t’ spend enough on maintain roads. Yet we will be the first to invoke bad roads as justification for allowing the political class to purchase fuel guzzlers.
We pay hefty salaries to MPs, judges and governors. But fully trained nurses and paramedics out of medical training colleges take years to be absorbed in rural dispensaries.
Graduates from State-owned primary teacher training colleges wait for years to be absorbed in primary schools. This is despite the fact that we have pathetic pupil-teacher ratios and notwithstanding the fact that the government has been running a free primary school programme for in excess of ten years.
University graduates in specialised disciplines such as veterinary medicine, civil engineering and agricultural economics tarmac for years and are unable to secure jobs in the civil service.
While our politicians obsess with the new VAT code, the problem of too much government is studiously avoided.
We should be engaged in a fact-based policy debate about balancing spending with tax reform.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
