Ghana: Minority NDC rejects 2.5 percent VAT increase
“The most punitive among these taxes is the addition of 2.5 per cent to the VAT rate bringing it to a cumulative 21.5 per cent (made up of 2.5 per cent GETFund, 2.5 per cent National Health Insurance, 1.0 per cent Covid Levy and 15 per cent VAT all levied under the terms of Value Added Act, (Act 870) the highest in Africa,”
The National Democratic Congress (NDC) Parliamentary Minority Caucus has rejected the proposed 2.5 per cent increase in value added tax (VAT) in the 2023 Budget Statement and Economic Policy of the Government.
Mr Haruna Iddrisu, the Minority leader, speaking at a press conference at Parliament House in Accra, said while the nation was facing economic challenges, the Government had decided to pile more hardships on the people through the introduction of more taxes in the 2023 Budget presented to Parliament.
“The most punitive among these taxes is the addition of 2.5 per cent to the VAT rate bringing it to a cumulative 21.5 per cent (made up of 2.5 per cent GETFund, 2.5 per cent National Health Insurance, 1.0 per cent Covid Levy and 15 per cent VAT all levied under the terms of Value Added Act, (Act 870) the highest in Africa,” Mr Iddrisu said.
He said in addition to the increase in VAT, they had detected 22 additional tax and revenue measures that would make life even more difficult and unbearable for every Ghanaian.
“As Social Democrats, we of the NDC stock have never been against taxation per se, but we are simply unable to agree with the steep increase and timing of the introduction of these tax measures,” Mr Iddrisu said.
He said at a time when Ghanaians were facing the worst economic crisis and hardships in their lifetime, the last thing that was desired is further taxation.
He noted that the high rate of inflation had already eroded the disposable incomes of Ghanaians and they could no longer bear to give more to a government that was determined to waste their resources on extravagant living.
Touching on the Electronic Transaction Levy (E-Levy, Mr Iddrisu said the Minority’s position on E-levy remains unchanged.
“It is a setback to this cashless economy. We are also astonished to learn in the Budget that the GHS 100 threshold for e-levy deductions has been abolished. How come that the threshold is being abolished. How do we protect the vulnerable poor?” he quizzed.
He said at least a GHS 300.00 threshold with a reduction in the principal from 1.7 per cent to 1.0 per cent.
“You recall my suggestion of a 1.00 per cent levy at a threshold of GHS 500.00, which was out-rightly rejected by Government at the negotiations. This was part of the discussion when we rejected “Agyapa”, he said.
He reiterated the NDC’s intention to abolish the e-levy when they come back to power but before then, they wish to serve notice that they would fiercely resist the removal of the GHS 100.00 threshold.
Concerning the unprecedented inflation and depreciation of the cedi, Mr Iddrisu said inflation, which had ballooned from 13 per cent in January to over 40 per cent in October, had diminished the value of GHS 100.00 and therefore the exemption threshold for e-levy should be increased to GHS 200.00 and not removed.
Mr Iddrisu said inflation had also wreaked havoc on personal income taxpayers and removed any justification for the introduction of the additional band of 35 per cent as announced in the 2023 budget.
Minority Leader said the Minister of Finance had announced “Major Policy” blue prints on Government’s debt restructuring on domestic debt restructuring promising to announce for extension for debt restructuring in due course.
“To put our unsustainable debt on the right path, we were told categorically by the President that ‘there will be no haircut’, at least we now know there is,” Mr Iddrisu said.
“The form and structure of this debt restructuring is unacceptable to the NDC Minority, we simply cannot agree to this as it has dire consequences on the financial sector, on pension funds and on jobs. We are all at risk,” he added.