Business News of 2013-12-02

Vehicle income tax, over-aged cars penalty to increase

Barring any unforeseen circumstances, quarterly income tax for commercial vehicles will go up next year.

During the budget reading last Tuesday, the Minister of Finance and Economic Planning hinted a possible review of the tax, which was last adjusted in 2005.

Mr Seth Terkper said “in the last revision of vehicle income tax, existing quarterly rates were increased for vehicles of all categories except trotros and taxis. It is only fair that we adjust these rates that have not changed since 2005.”

But speaking to the Daily Graphic, Maxwell Antwi-Bosiako, a taxi driver, said if reviewed upward, it would only add to the burden of commercial transport owners.

“Fuel price keeps on going up and when the reductions even come they are so small. People are avoiding taxis; an extra tax will keep most of us out of business”.

Daniel Otoo, a trotro driver, shares that position and adds that, “we are paying so much for road tolls every day. Why would they want to increase tax on income again when we are struggling to keep up with the financial demands of our car owners?”

However, the minister had indicated that the responsibility of payment was not on drivers but vehicle owners.

“There is an alternative for the owners to opt to file their tax returns if they believe this presumptive tax is too high. Owners who will opt to file their tax returns will take advantage of the additional deductions allowed for business (for example capital allowances and personal reliefs), the minister said.

Currently, an owner of a 33-seater commercial vehicle is paying GH¢15 per quarter (GH¢ 5 per month) as compared to rates paid by public servants and other workers in the formal sector.

Importation of over aged vehicles

Taxes on over-aged vehicles are also likely to shoot up next year.

According to the minister, “considering the environmental implications of overaged cars and the risk associated with its usage on our roads, the Ministry of Finance and the Ghana Revenue Authority will conduct a comprehensive review of the tax regime on over-aged cars and submit proposals to Parliament in the course of the year.”

Automobiles beyond a certain age were completely banned in the country in 1993. However, Parliament in 2002 amended the Customs, Excise and Preventive Service (Management Law) of 1993 on the importation of over-aged vehicles, which allows the importation of over-aged cars but with a penalty.

Per the law, the age of motor vehicles is calculated from the year in which the vehicle was manufactured.