Business News of Thu, 2 Mar 201784

Abolishing spare parts tax will encourage smuggling – Seth Terkper

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Former Finance Minister, Seth Terkper is warning of dire repercussions on Ghana’s economy given the reduction of taxes by the Akufo-Add led government.

According to him, the reduction will only encourage smuggling and deprive government of needed taxes for development.

His comment comes after Finance Minister, Ken Ofori-Atta while delivering the 2017 Budget in Parliament announced government's decision to abolish eight taxes and reduce four others, many of which were set by the previous government.

The taxes the Minister listed to be abolished and reduced include; (a) Abolish one percent special import levy,

(b) Abolish 17.5 VAT on financial services

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(c) Abolish 17.5% VAT on selected imported medicines

(d) Initiate steps to remove import duties on raw materials and machinery

(e) Abolish 17.5 VAT on domestic airline tickets

(f) Abolish 5% VAT on real estates

(g) Abolish excise duty on petroleum

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(h) Reduce special petroleum tax rate from 17.5% to 15%

(i) Abolish duties on importation of spare parts.

(j) Abolish levies imposed on Kayayei's by local authorities

(k) Replace the 17.5 VAT on Ghana Stock Exchange (GSE) traders to a flat rate of 3.5 percent

(l) Reduce National Electrification levy

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According to Mr Ofori-Atta, many of the taxes were nuisance taxes, and hence the removal will ease the difficulties imposed on Ghanaians.

But Former Finance Minister in an interview with Joy News said the tax cuts is a recipe for disaster.

He explained that tax free spare parts importation is only going to deprive Ghana of revenues.

Seth Terper urged government to weigh the pros and cons before implementing the reduction.

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