Minority Accuses Gov’t of Increasing VAT Through Backdoor

James Klutse Avedzi, Chairman of the Public Accounts committee of Parliament and MP for Ketu North constituency, has accused the government and the Finance Minister of increasing the Value Added Tax (VAT) through the backdoor.

The Deputy Minority leader said the Finance Minister was economical with the truth when he told the House that VAT rate would not be increased, and expressed dissatisfaction with the way he ‘disingenuously’ increased VAT, in spite of public outcry.

He revealed that the new system, which would allow the GETFund and the NHIA Funds to be levied on their own, would rather be more costly than what is currently in operation.

“The impact is greater than even imposing a one or two per cent extra VAT rate”, he said, adding that, “Consumers are going to pay more.”

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

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

Responding, the Deputy Finance Minister and Member of Parliament for Obuasi, Kweku Kwarteng, indicated that the new tax regime announced by the Minister is 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 the new regime.

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

There were heightened speculations that VAT was going to be increased from 17.5% to 21% to cater for revenue shortfalls, a rumour that was rubbished by the minister.

By: Frederick E. Aggrey