|Audio Attachment:Listen to Ken Ofori-Atta|
Finance Minister, Ken Ofori-Atta says there will be no increase in Value Added Tax (VAT) as widely speculated.
He made this known while presenting the mid-year budget review in Parliament, Thursday.
There were earlier reports that government intended to increase VAT from 17.5% to 21.5%.
The minority after hearing this, vowed to resist any VAT increment since Ghanaians are already facing hardship.
However, Mr Ofori-Atta swerved the minority saying "I’ll like to inform the house Mr Speaker that there will be no increase in VAT".
According to him, "last year we abolished numerous taxes. The scale of tax reductions had never been implemented in the 60 years of Ghana’s economic history since independence. The evidence shows that the economy has responded positively to these tax cuts. What is also clear to us Mr Speaker is that we are not collecting as much as we should".
To solve this problem, government instead of resorting to the imposition of many taxes, has brought out four measures:
- ensure compliance with existing tax laws,
- plug the leakages in the existing system,
- ensure value-for-money for the expenditures that government undertakes and
- ensure that the wealthy also pay their fair share.
Apart from this, to meet fiscal deficit target and to ensure that Ghana exits from the IMF programe: "we are converting the NHIS 2.5% to a straight levy of 2.5%; Converting GETFUND of 2.5% to the straight levy of 2.5%. VAT will thus be maintained at 12.5%. We are imposing a luxury vehicle tax. We are reviewing personal income tax of 10,000 cedis, intensifying compliance measures".
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