….As Minority Caucus accuses him of contempt of Parliament
Following the reading of the 2017 budget and economic statement of the government, Parliament passed the Valued Added Tax (VAT) Amendment Act (2017) to allow for retailers and wholesalers to pay 3 percent tax instead of 17.5 percent charges on non-core financial services.
Last week, Thursday, the Minority Leader, Haruna Iddrisu, moved a motion on the floor of parliament asking that the august House compels the Minister to reverse the suspension of the implementation.
Mr Iddrisu said the decision by the Finance Ministry to suspend the approved tax cuts will create confusion in the minds of the Ghanaian public and to businesses.
“That is even contemptible of this House; that an institution such as GRA and the Minister of Finance will set aside an Act of Parliament and just make an announcement that I am suspending this tax cut,” he said on the floor of Parliament.
However, Deputy Finance Minister, Kweku Kwarteng, opposed the motion by the Minority Leader, insisting that the Ministry has run into difficulties in implementing the tax cuts but efforts are underway to rectify them.
“When the tax officers went to collect the taxes, the taxpayers complained that the GRA officers were not implementing the measure as they understood it from the law. So they petitioned the Ministry of Finance. The taxpayers’ concerns needed more attention,” Mr Kwarteng explained.
He adds that suspension of the implementation of the tax cut on June 1 was to enable resolution of the misunderstanding.
To give legal effect to the policy on VAT on Financial services however, Parliament in March 2017, passed the Value Added Tax (Amendment), Act 2017, Act 948, and to include the supply of the financial services as exempt supply.
In arguing his motion, Mr. Iddrisu cited a newspaper in which he said the GRA had published a notice of suspension of implementation of the tax signed by the Commissioner General of the authority.
“From my emphasis…it says that, the implementation of the 3 percent vat flat rate scheme which should have started on 1st June 2017, be postponed to 1st July 2017. Mr. Speaker, first of all, I want to refer you to article 106 of the Constitution; and it provides that the power of Parliament to make laws shall be exercised by bills, passed by Parliament and assented to by the President. Mr. Speaker, we were in this House in April when the Minister of Finance introduced what was called the value added tax amendment bill 2017. Subsequently, this august House subjected the bill through the proper processes of legislative scrutiny and passed it unto law. Mr. Speaker, I’m holding here a copy of Act 948 assented to by the President as reported in the Gazette of 5th April 2017. The date of Gazette notification is 7th April 2017…And now we are in the month of June and its being differed,” he said.
The Minority Leader also noted that, the publication would create confusion in the minds of Ghanaians and businesses because it has conflicting figures on which percentage of tax was supposed to be cut off.
“This publication is only going to create confusion in the minds of the Ghanaian public and to businesses, wholesalers and retailers, in one breadth, 17.5 percent, and in another breadth 3 percent flat rate. Mr. Speaker, this is even contemptible of this House; that an institution of GRA and Ministry of Finance will set aside an act of Parliament and just make an announcement that I’m suspending this tax payment,” he explained.
“Mr. Speaker, my motion is to call on the Minister to arrest this contemptible action of the GRA and stop the confusion in the minds of Ghanaians wholesalers and retailers as to which tax rate to pay. I know government is struggling for fiscal space; but even in looking for that space, there must be discipline and the GRA must give reasons why they must not be brought here to explain they are not in contempt of Parliament,” he added.
Again, Kwaku Kwarteng, argued that the decision to postpone the implementation of the law is not necessarily a breach of law but borne out of a genuine challenge with the implementation of the tax.
“The GRA would need to communicate the new ways of implementing the tax to their offices on the ground who actually go to the tax payers to collect the tax. Mr. Speaker, we were in a hurry, we told the Ghana Revenue Authority to immediately implement this law. In response, the GRA did issue that administrative directive also known as tax notes. When the tax officers went to taxpayers to collect the taxes, the taxpayers raised concerns about conflict in the way the tax officers were administering the new tax measure and the tax measure itself. That is, the taxpayers complained that the GRA officers were not implementing the measure as they ought to in the law so they petitioned the Ministry of Finance.”
“We have had engagements with the taxpayers involved as well as the GRA. And it is worthy of note that indeed the taxpayers concerns needed more attention. To do that, we advised the GRA to withdraw the tax notes so that we can resolve the misunderstanding and then they can proceed with the implementation as has started already. So the suggestion that somehow we are suspending a law passed by this house is incorrect,” he clarified.
On the newspaper advert, Mr. Kwarteng said it was wrongly worded.
“I have seen the advert that my colleague was referring to, I’ve looked at it and I think it was an error. I am clear in my mind that, that advert is an error. Nobody, not even the Ministry of Finance has the power to suspend a law that has been passed by this House. And therefore the motion that suggest that Ministry of Finance and the GRA has suspended the implementation must not carry because the preparation and issue, and in fact the communication of this practice notes are being implemented and we are doing so. So to bring a motion to this House that suggests that somehow we have halted the implementation…is wrong,” the Deputy Finance Minister argued.
The Speaker, Prof Mike Ocquaye, then directed that leadership of the Finance Committee of Parliament to meet the Finance Minister and the GRA and agree on how the 3% flat VAT rate will be implemented.