The Minority have insisted that government has secretly increased the Value Added Tax (VAT) by 5percent. This means that VAT now stands at 22.5percent from 17.5percent.
The Minority at a roundtable breakfast dialogue days before the presentation of the 2018 mid-year fiscal policy review, unequivocally claimed the government was going to increase VAT, leading to huge public uproar.
But in a sudden turn of event, Mr. Ofori-Atta dismissed the claim of the Minority as untrue before Parliament Thursday during his presentation of the 2018 mid-year fiscal review.
“I wish to assure the House that VAT will not be increased,” he told Parliament and cautioned the Minority from taking policy briefs on the economy on social media.
“I would like to advise our friends in the opposition that they should stop taking policy direction on the economy from social media,” the Finance Minister advised.
That notwithstanding Mr. Ofori-Atta announced various fiscal measures to enable government meet its revenue target including; intensive conversion of NHIL (2.5%) to a straight levy, conversion of GETFund VAT rate of 2.5% to a straight levy, imposition of luxury vehicle tax of GH¢1,000-GH¢2,000 on non-commercial vehicles with capacity of 3.0 litres and above and a review of PIT to include an additional band of GH¢10,000 and above per month at a rate of 35% and downward adjustment discretionary expenditures.
But speaking to Starr News’ Parliamentary correspondent Ibrahim Alhassan, the Minority Member of Parliament for Bolgatanga Central Isaac Adongo argued that the government surreptitiously increased the VAT by 5percent.
“Unless you don’t understand the dynamics, we got it perfectly right. Government did it worst today. You need to understand the mechanics of Value Added Tax (VAT) to understand that there’s a de-facto increase of the VAT by 5percent, a de-facto increase,” he stated.
Also former Finance Minister Seth Terkper said removing NHIL (2.5%) and GETFund (2.5%) from the VAT base and making them specific rates (instead of ad valorem) and increasing that rate to earn more revenue is a ruse.
“It is a VAT increase in disguise. Businesses should not rejoice yet because they cannot claim Input Tax Credit/refunds on 5% of the current 17.5 percent rate. Already, the Flat Rate is denying some registered businesses refunds and Input Tax Credit. The measure amounts to a parallel Sales Tax regime that the VAT replaced. It is a retrogressive step and further mutilation of the VAT regime,” he stated.
Source: Ghana/Starrfmonline.com/103.5FM
