Parliament last Friday approved a 2.5percent increase in the VAT threshold from the current 12.5 per cent to 15 per cent despite the Minority’s boycott of proceedings.
The minority members, led by Osei Kyei-Mensah-Bonsu, staged a walkout when a Deputy Minister for Finance, Ato Casiel Forson, moved that Clause 3 of the VAT (Amendment) Bill be amended to increase the tax rate from 12.5 per cent to 15 per cent.
According to him the Value Added Tax (Amendment) Bill, which was before the House for consideration and approval, did not include the imposition of any increment of the VAT tax.
The minority leader noted that the principle and policy drive of the VAT bill, as spelt out in the memorandum of the bill, was to consolidate the law relating to value added tax and not to increase the threshold.
However Benjamin Kumbuor, Majority Leader and Minister for Government Business, in a reaction expressed concerns over the inability of the minority to challenge the economic sense of the 2.5 per cent, and said the decision to add the figure was discussed with the minority involved and the speaker ruled on it.
He said the VAT has been increased so many times without any ceremonial work-out adding that; the minority should “wait till Tuesday to see why the increment has been done”.
According to him, for government to provide social amenities like water, electricity, hospitals and schools, it needs money from its citizens
The Majority Leader, said there was nothing wrong with the imposition of the increment because it was not a major policy which should necessarily be included in the memorandum of the bill.
He said Ghana was one of the countries with the least VAT rates adding that it was imperative to increase the rates to generate more revenue for the state.
He also observed that there was nothing wrong with the procedure.
Chairman of the Finance Committee of Parliament, James Avedzi, who spoke to the press shortly after the passage of the VAT justified the increase and explained that it was to enable government generate enough revenue for developmental projects.
James Avedzi noted that “existing taxes government is collecting is nowhere near what we need as a country to build infrastructure and the economy”.
The VAT bill seeks to mobilise, harmonise and consolidate the administrative provisions in the tax legislation of the erstwhile revenue agencies into a Revenue Administration Act.
The initiative is intended not only to simplify tax legislation in respect of revenue administration and make it more user-friendly but also to iron out the differences in compliance requirements relating to similar operationsal activities of the different tax types.
