Ghana’s immediate past Finance Minister, Seth Terkper has said, the decision by government to remove the 2.5% National Health Insurance Levy and the 2.5% GETFund from the Value Added Tax (VAT) and make them specific rates is a ruse.
The former sector minister in write up following the presentation of the 2018 mid-year budget review by Ken Ofori-Atta, the current minister said the decision by government is a VAT increase in disguise.
Days before the presentation, speculations were rife about a possible increment of VAT from 17.5 percent to 21.5 percent.
The speculations were met with varied views from the general public and the minority held a press conference to that effect.
However, presenting the mid-year budget review, the minister disputed the speculations.
He said, ‘’I wish to assure the House that VAT will not be increased. I would like to advise our friends in the opposition that they should stop taking direction on the economy from Social Media.’’
However, the former minister who once occupied his position has reacted saying: ‘’Ghana’s VAT rate is 17.5 percent and that includes NHL (2.5%) and GETFund (2.5%). Removing them from the VAT base and making them specific rates (instead of valorem) and increasing that rate to earn more revenue (quoting Hon Kwarteng) is a ruse.
It is a VAT increase in disguise. Businesses should not rejoice yet because they cannot claim Input Tax Credit/Funds 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.’’