Accra, Nov. 19, GNA - In order to protect the environment, government is proposing a 20 per cent environmental tax on plastic packaging materials and products, excluding bottled water which already attracts excise duty. The environmental tax would be charged at the importation and any production or collection points.
Dr Kwabena Duffuor, Minister of Finance and Economic Planning who announced this when presenting the 2011 Budget to Parliament on Thursday, said government would also increase excise duty on cigarettes from 140 per cent to 150 per cent in line with international agreements.
He said the change from specific to ad-valorem excise duties on tobacco, alcoholic and non-alcoholic beverages rates had achieved the desired objective. However, Dr Duffuor said, government cognisant of the need to remain=
competitive and of concerns of industry was proposing to reduce the ad-valorem rate by 2.5 per cent on all excisable goods except on spirits and cigarette.
The Finance Minister said government was also proposing an upward revision of presumptive vehicle income tax rates to improve fairness with=
the payment of personal income tax and other income taxes.
Dr Duffuor said the Communication Service Tax (CST), the coverage of=
which had been restricted to the class 1A telecom operators would now be extended to all companies and persons across the industry to ensure fairn= ess across the industry in conformity with the existing law. The Sector Minister said in order to improve the efficiency in tax administration following the integration of VAT and IRS, and improve on t= ax audits of the top tier VAT payers, the VAT threshold would increase from GH¢10,000 to GH¢90,000 for both goods and services. VAT taxpayers who fall below the GH¢90,000 threshold would now fal= l into a new scheme of combined VAT and income tax assessment. The details of the combined assessment would be in the VAT Amendment Bill to be submitte= d to Parliament soon.
Dr Duffuor said government would encourage voluntary compliance of professionals in the discharge of their tax obligations and in 2011 government would focus on the revenue contribution from the self-employed=
group with special emphasis on professionals. Government would establish a special desk in the Domestic Tax Divisi= on of the Ghana Revenue Authority to monitor compliance of professionals in their tax payments. Dr Duffuor said personal income taxation would continue to be used a= s a major tool for equitable distribution of income and for the protection of=
low income earners.
To this end, government would revise the income tax threshold and bracket during the 2011 fiscal year. The revision would also take into account the inflationary impact on wages and salaries. The following tax bands and rates are proposed.
* For the first GH¢1,140 of income, the tax is free;
* For the next GH¢360 the tax rate is 5 percent;
* For the next GH¢840, the tax rate is 10 percent;
* For the next GH¢17,976, the tax rate is 17.5 percent; and * For income exceeding GH¢20,280, the tax rate is 25 percent.
He said while the changes in the exempt income tax band and brackets=
were beneficial to all income earners, they did not address adequately the social burden of families with children, dependent spouses, and dependent=
relatives.
Since 2007, the rates of personal reliefs have remained the same. T= his discourages taxpayers to file their returns and benefit from the reliefs. Therefore, significant improvements have been made in the reliefs fo= r the 2011 year of assessment:-
* For marriage/dependant responsibility the new rate is 100 currency poin= ts;
* For old age, the new rate is 100 currency points;
* For child education, the new rate is 100 currency points up to 3 childr= en;
* For aged dependant relative, the new rate is 50 currency points; and
* For training cost, the new relief is 200 currency points.
* Personal relief for the disabled remains at 25 per cent of the taxable income. "I encourage and urge tax payers to file their returns and get the requisite credit," he added. Dr Duffuor said government was proposing to increase airport tax fro= m 75 dollars to 100 dollars for economy, 150 dollars for business and 200 dollars for first class passengers, for international travel; 50 dollars to 60 dollars for regional travel and GH¢1.00 to GH¢5.00 for domestic tr= avel. To address revenue leakages through exemptions, government is developing clear criteria for evaluating Parliamentary permits, waivers a= nd granting exemptions with clear sunset clauses. These include exclusion of personal exemptions beyond what the law permits and all import duty exemptions. Dr Duffuor said the revenues measures were expected to impact positively on the total resource envelope for the 2011 budget. Details of the 2011 resource envelope are as follows: -
* Total non-oil revenue and grants is estimated at GH¢10,017.8 million,=
equivalent of 32.1 per cent of GDP. The expected non-oil revenue and gran= ts for the year represents a 13.5 per cent increase over the projected outtu= rn for 2010.
* Total revenue from oil into the budget is estimated at GH¢584 million= , equivalent to 1.9 per cent of GDP.
* Total oil and non-oil revenue and grants are thus estimated at GH¢10,= 601 million of 34.0 per cent of GDP.
* Domestic revenue is estimated at GH¢9,299.5 million, representing 21.= 5 per cent increase over the projected out-turn for 2010.
* Tax revenue is estimated at GH¢7,712.5 million representing 24.8 per cent of GDP. Non-tax revenue is expected to increase by 26.4 per cent over th= e projected out-turn in 2010.
* Grants from development partners are estimated to increase to GH¢1,30= 1.6 million, equivalent to 4.2 per cent of GDP and accounting for 12.3 per ce= nt of total revenue and grants. Total expenditure for 2011 is estimated at GH¢12,670.8 million, equivalent to 40.7 per cent of GDP. Of this amount, recurrent expenditure= is estimated at GH¢8,924.9 million, equivalent to 28.6 per cent of GDP and= 70.4 per cent of total expenditure. About GH¢3,745.9 million, equivalent to 12.0 per cent of GDP is estimated for capital expenditure. 1
