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VAT increased through back door -Minority

botchway July 20, 2018

By Frederick E. Aggrey  .



Budget readings, State of the Nation Addresses and Mid-year financial reviews on the floor of Parliament have always been characterised by controversies and drama, and yesterday’s presentation of the mid-year budget review was no exception. 

The Minority started the day with shouts and songs as the House began Public Business. 13 loans and related agreements were presented to the House, and the Minority raised ‘eyebrows’ about the number.

Ostensibly to show that 13 loan agreements were too many for a government which had earlier promised to plug loopholes in the revenue chain to fund important policy interventions, the Minority sang the phrase “1 day 13 loans” and made noise as the agreements were being laid.

The Minority, afterwards, threw the House into a state of excitement, as the Finance Minister, Ken Ofori Atta, took the stage and supposedly failed to recognise the Vice President in his salutation, after addressing the Speaker alone, opening the door for speculations.

It was the turn of the Majority side also to show that they had also been in opposition before.

The side shouted at the Minority when the Finance Minister announced that there was not going to be Value Added Tax (VAT) increment. They shouted “shame, shame, shame” to their counterparts.

The Vice President, who graced the occasion, ushered the House into a state of shouts and excitement as he entered, with the Minority calling him all sorts of names.

Meanwhile, Mr James Klutse Avedzi, Chairman of the Public Accounts Committee of the House and Member of Parliament (MP) for Ketu North Constituency, has accused the government and the Finance Minister of increasing the Value Added Tax (VAT) through the backdoor.

According to him, the Finance Minister was economical with the truth when he told the House that the VAT rate will not be increased.
He expressed his dissatisfaction about how the Finance Minister disingenuously increased VAT in spite of a public outcry.

He revealed that the new system, which will allow the Ghana Education Trust Fund (GETFund) and the National Health Insurance Authority (NHIA) Fund to be levied on their own would rather be costlier than what it used to be.

He added: “The impact is greater than even imposing a one or 2% VAT rate extra, consumers are going to pay more instead.”

The Finance Minister, in his presentation of the mid-year budget review, indicated that the government will be converting the GETFund of 2.5% and NHIA Fund also of 2.5% on the VAT to a straight levy of 2.5% for both.

A new tax on luxury vehicles and high income earners (those earning above GH¢10,000) was also announced by the Finance Minister.

There were heightened speculations that VAT was going to be increased from 17.5% to 21% to cater for revenue shortfalls, a case rubbished by the Finance Minister, who announced that there would be no increment in the VAT rate.

James Klutse Avedzi further advised the government to stick to its own promises on tax, further asking the government to put measures in place to expand the tax net instead.

The Deputy Finance Minister and Member of Parliament for Obuasi, Kweku Kwarteng, however, indicated that the new tax regime announced by the Finance Minister was progressive and would help in the revenue generation of the government.

He, however, admitted that consumers would pay a little higher than they used to pay, with the introduction of this tax regime.

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