Finance Minister, Ken Ofori-Atta on Thursday 19th July 2018 presented the Mid- Year Budget
The much-awaited maiden budget which was exposed to criticisms and commendations as well threw many into bewilderment.
The Finance Minister, Ken Ofori-Atta explained that the focus of the government’s economic management is to shift emphasis from taxation to production. This strategy aims at stimulating growth in the private sector to accelerate job creation and prosperity., With the above focus in view, the government in 2017 reduced the tax burden by more than GH¢1 billion through the abolishing of some taxes and the restructuring of others.
Taxes abolished included the 17.5 per cent VAT/NHIL on Financial Services and the one per cent Import Duty on Spare Parts. Also VAT on Real Estates, domestic airlines and some imported pharmaceutical products to ease the burden on the National Health Insurance Scheme were removed. In February 2018, government further reduced the Special Petroleum Tax for consumers at a time of rising oil prices on the international market.
But there are many developments to make tax collection very effective
Did such initiatives benefit the masses at all? Was Production boost so much as expected?
The Mid-Year budget was no different, but new initiatives were taken
- Government will be consolidating contributions to the Health Insurance Fund Levy and the GETFund portion of the VAT into a separate Health and Education Levy. This the Finance said It will enable the Government to isolate and increase the budget for health and education. Both the Health Insurance Fund and the GETFund levies will continue to be 2.5 per cent each, while the applicable VAT rate is 12.5 per cent
On the new VAT regime announced by the Finance Minister, many have asserted that it is increased in disguise. That is to say that 5% straight levies for GETFund and NHIS appear to be an increase of VAT through the back door, rightly quoting Prof. Peter Quartey, “It could be an increase in disguise depending on whether we are applying it on the same product as the VAT. The specifics would have to be confirmed by the minister.
- The Government has also proposed to introduce a luxury vehicle levy on vehicles with engine capacities of 3.0 litres and above. The levy will be paid on first registration and subsequently at annual renewal. Commercial vehicles will be exempted from this policy
- There is also an initiative to tax workers with an income of over 10,000 at the rate of 35% for every extra amount earned
To build a strong nation with self-finance systems, accountability should be the Key Factor. Many citizens do not see the reason to pay taxes if their expected needs are not met. To them, government still borrow to finance most of the major activities it undertakes.
Stay tuned as we compare taxes collected so far into the state coffers and how it is been used.
Source: Ebenezer Nkum / Business.com.gh