Many Ghanaians are at their wits’ end over the failure of the Ministry of Finance to scrape the luxury vehicle tax, which is obviously a nuisance tax.
By definition, a thing is said to be a nuisance if it causes inconvenience or annoyance to society.
According to the books, some notable synonyms of the word nuisance include irritation, inconvenience, bother, difficulty, trouble, burden, thorn in the flesh, pain in the neck, menace, etc.
And it was for this reason that government, in March, 2017, announced the abolition of eleven taxes it considered ‘nuisance’, and reviewed four others that were negatively affecting businesses in the country.
According to Kenneth Ofori-Atta, Minister of Finance, the move was aimed at lessening the burden on consumers and businesses and boosting the private sector, which he referred to as the engine of growth.
The eleven abolished taxes included the 1% Special Import Levy, 17.5% VAT/NHIL on financial services, 17.5% VAT/NHIL on selected imported medicines that were not produced locally, import duties on raw materials and machinery for production within the context of the ECOWAS Common External Tariff (CET) Protocol and 17.5% VAT/NHIL on domestic airline tickets.
The rest were the 5% VAT/NHIL on Real Estate sales, Excise duty on petroleum, Special Petroleum tax rate from 17.5% to 15%, duties on the importation of spare parts, Kayayei levies and taxation on gains from the realisation of securities listed on the Ghana Stock Exchange.
The government further reduced the national electrification scheme levy from 5% to 3%, public lighting levy from 5% to 2%, replaced the 17.5% VAT/NHIL rate with a flat rate of 3% for traders and implemented tax credits and other incentives for businesses that hire young graduates.
Interestingly, no sooner had Ghanaians started jubilating over those abolitions than a new regime was introduced by the same ministry.
The government, in August, 2018, introduced the vehicle luxury tax, in which vehicles with engine capacities above 2950 Cubic Centimetres are required to pay various ‘punitive’ taxes ranging from GH¢1,000, to GH¢2,000 per annum.
Even though the essence of the tax was to generate revenue, it is not clear of that mission was being achieved.
At a demonstration in Accra last week, the industry players, including the Vehicle and Asset Dealers Association of Ghana (VADAG), National Concerned Spare Parts Dealers Association, True Drivers Union, Concerned Drivers Association, Ghana Committed Drivers Association and Chamber of Petroleum Consumers, disclosed that over 5,000 ‘supposed’ luxury vehicles had since been parked in various garages across the country because prospective buyers, in an attempt to avoid the levy, had refused to buy them.
If these figures are true, then we think something needs to be done as soon as possible about the situation.
THE PUBLISHER is tempted to agree with many Ghanaians who think that the tax was not well thought through before it was introduced.
In our view, selective taxes such as the luxury vehicle tax, can only survive if the demand for the commodities on which they are placed are inelastic. Unfortunately, it does not look like high engine vehicles are in the category of such commodities.
The paper thinks that, apart from killing local business, the levy is giving political impetus to the opposition, who would use it for as long as it would serve their interest.
As it stands now, many New Patriotic Party (NPP) businessmen are getting disillusioned with certain decisions from the Finance Ministry, and Ken Ofori-Atta must take note.
This Nuisance Tax Must Also Go!