NHIL separation from VAT won’t create additional revenue – Lecturer

A lecturer at the University of Ghana Business School, Dr. Ibrahim Bedi says claims that government will generate additional revenue due to the separation of the National Health Insurance Levy (NHIL) from the Value Added Tax (VAT) is inaccurate.

Finance Minister, Ken Ofori Atta announced the separation while presenting the midyear budget review to Parliament on Thursday, July 19.

Speaking on 3FM’s Sunrise, the lecturer said the separation of the Value Added Tax (VAT) and the National Health Insurance Levy (NHIL) was a smart move as against rumors that there was going to be an increase in VAT.

Many had been made to believe that the action will generate additional revenue for the state.

“That statement is inaccurate, separating the taxes doesn’t mean the revenue will come,” Dr. Bedi said.

“When businesses buy goods, they would have to input NHIL separately, and when an item is bought from them, it becomes an output, hence, there is no additional revenue to government.”

He mentioned that there are multiple interpretations on the issue of VAT, hence it will only be clearly understood based on how the policy is implemented.

In his view the NHIL has always been a levy and this measure taken by the government is only a strategy to appease Ghanaians.

“This measure taken by the government is strategic, so that in some time to come when VAT is increased Ghanaians would not complain since they now understand that NHIL is only a levy and different from VAT,” Dr. Bedi analysed.