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General News Tue, 29 Apr 1997

Reintroduction Of VAT Well Underway - Peprah

Accra The Ministry of Finance is stepping up its preparations for the smooth re-introduction of the Value Added Tax (VAT). This is to avoid the mistakes that led to the confusion and misunderstanding about the tax regime in 1995 and its subsequent withdrawal, the Minister of Finance, Mr Kwame Peprah, told the Ghana News Agency in Accra today. These include proposals on the composition of the VAT Oversight Committee, setting up of a VAT Project team, revision of the 1995 VAT implementation programme, plans for a vigorous and effective education and publicity campaign, training of staff and the drafting of a new VAT law. Mr Peprah said a 15-member VAT Oversight Committee under his chairmanship has been proposed. Others members include the Minister of Communications, Minister of Trade and Industry, Commissioner of Internal Revenue Service, Commissioner of Customs, Excise and Preventive Service (CEPS) and the Director of VAT Project.

The rest are Director of National Revenue Secretariat (NRS) and a representative each of the Ghana Chamber of Commerce, Ghana Association of Industries, Association of Market Women, Trades Union Congress, FORUM and the Ghana Union Traders Association. There will be two others from some stakeholders who will be named later.

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Mr Peprah said a lot of work has been done and is still being done since he announced the intention of the government to re- introduce VAT during the presentation of the 1997 budget on February 19. "The current priority of the design and implementation schedule we are following is to ensure the early formulation of the VAT Bill and its passage into law in good time to permit adequate time for full education of traders and the public before the tax comes on stream. "Without a law to define certain features of the tax, the education will not be comprehensive and precise." Mr Peprah said a VAT Project team which has been set up in his ministry started its work with a study to review the previous VAT implementation plan with a view to identifying what went wrong in 1995. "They have also been analyzing the outcome of the actual implementation for the three months the tax operated." The minister said on the basis of their findings, a new and detailed implementation plan has been drawn up taking into account the short-comings of the previous experience. Mr Peprah conceded that the education and publicity in 1995 did not make the expected impact because much of it came prior to the passage of the VAT law when such key features as the turnover threshold, rate of tax and exemption list, had not been defined.

Most traders, therefore, did not pay much heed to the educational campaign as there was no certainty that the law would be passed and requirements and procedures for registration were not known. Mr Peprah said the late passage of the law allowed only two months of meaningful education on the features of the tax which could only be defined by law. "With the benefit hindsight, we find that this period was rather too short for the kind of education required for such a major policy requirement." Mr Peprah said central to the government's implementation strategy is to get the policy framework for the new VAT defined very early. This will be translated into a draft legislation that would be presented to Parliament. "The goal is to do this in good enough time to allow not less than six months of intensive and well-focussed publicity and education before the tax becomes effective in January 1998. "We are at an advanced stage in the drafting of the legislation which will go for cabinet approval and presentation to Parliament by June."

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