Friday, July 20, 2018

VAT Increased In Disguise, Prices Will Go Up – Terkper

Former Finance Minister, Seth Terkper has urged businesses in the country not to rejoice over the 2018 mid-year budget review, which supposedly tried not to increase Value Added Tax (VAT) across board.

According to Terkper, the budget review, with regard to separating National Health Insurance Levy (NHIL) and Ghana Education Trust Fund (GETFund) levies from the 17.5 per cent flat VAT rate, is actually a VAT increase in disguise.

Ghanas VAT rate is 17.5 percent and that includes NHIL (2.5 percent) and GETFund (2.5 percent).

Removing them from the VAT base and making them specific rates (instead of ad valorem) and increasing that rate to earn more revenue (quoting Kwarteng) is a ruse, he stated in a series of tweets yesterday.

It is a VAT increase in disguise. Businesses should not rejoice yet because the New Patriotic Party (NPP) cannot claim Input Tax Credit/refunds on 5 percent of the current 17.5 per centrate. Already, the Flat Rate is denying some registered businesses refunds and Input Tax Credit, Terkper added.

Terkper went on to argue that 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.

The removal of Input Tax Credit and Refunds will increase costs and prices. It is not an efficient and business-friendly move, the former Finance Minister added.

By Ghana Leaks Blog


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