Business

News

Sports

Entertainment

GhanaWeb TV

Africa

Opinions

Country

New taxes to rake in GH¢845 million

Ken Ofori Atta Budget 2018 Finance Minister, Ken Ofori Atta presenting the Mid-year Budget Review to the House

Fri, 20 Jul 2018 Source: thefinderonline.com

New tax measures introduced by government in the mid-year budget review are expected to generate GH¢845m.

On the other hand, government will also reduce expenditure by GH¢664m to make up for the GH¢1.4 billion deficit.

Minister for Finance and Economic Planning, Ken Ofori-Atta said these measures, among others, are to ensure the government meets its fiscal deficit target of 4.5% of GDP.

He announced various measures yesterday during the presentation of the mid-year budget review to guarantee increased revenue and improve efficiency in public spending to ensure the achievement of fiscal targets.

The Minister disclosed that the government was set to separate the Health Insurance Fund Levy (NHIL) and the Ghana Education Trust Fund (GETFund) component from the Value Added Tax (VAT).

Both the Health Insurance Fund and the GETFund levies will continue to be 2.5% each while the applicable VAT rate is 12.5%.

This comes amid the growing concern about financial challenges facing the National Health Insurance Scheme (NHIS).



The GETFund also has a bearing on the infrastructure needs of senior high schools amid the increased intake brought on by the Free SHS policy.

Ofori-Atta said, “Studies have indicated that current revenue sources do not guarantee the sustainability of the NHIS given that enrolment to the Scheme has increased over the years. The GETFund is also inadequate in the face of an expanding student population and need for additional infrastructure.”

Ofori-Atta stated that government is, therefore, consolidating contributions to the Health Insurance Fund Levy and the GETFund portion of the VAT into separate health and education levies.

“This will enable the government isolate and increase the budget for health and education,” the Finance Minister said.

Levy on luxury vehicles

Government is set to introduce a new levy on vehicles with engine capacities of 3.0 litres and above.

This imposition of the new levy will be known as a luxury vehicle tax.

The levy, according to government, will be paid on first registration and subsequently during annual renewal.

“Government proposes to introduce a luxury vehicle levy on vehicles with engine capacities of 3.0 litres and above. The levy will be paid on first registration and subsequently at annual renewal,” he said.

35% Personal Income Tax for GH¢10,000 salary earners

The Personal Income Tax is also to include an additional band of GH¢10,000 and above per month at a rate of 35%.

The Finance Minister announced that a new band rate needs to be added to Ghana’s current five band graduated income tax rate for individuals.

By this, the government has reclassified workers considered high-income earners.

According to the Finance Minister, the new high-net-worth income tax is needed to make the rates charged in the country more equitable.

This, he also added, was in line with best practice around the world.

He said as part of efforts to improve revenue performance, the government would strengthen tax compliance and plug the necessary revenue leakages.

“We are intensifying compliance measures to make sure we collect the taxes that are due us,” he said.

He mentioned that the government was also rolling out some initiatives to address tax compliance issues, adding that, “These initiatives would include prosecution of tax invaders and corrupt tax officials, a special Vat Attack Force to ensure enforcement and deepen VAT penetration from the current low levels of 11%, and institutionalised reforms of the Ghana Revenue Authority.”

Ofori-Atta said government was determined to widen the tax net and to make it fairer, simpler and convenient for citizens to meet the obligation of contributing towards national development.



“To ensure that government achieves the 2018 revenue targets, we have brought a number of reforms and measures into the tax regime. These initiatives will improve the efficiency of our tax administration, reduce costs and enhance taxpayer services,” he stated.

On tax compliance, the Finance Minister said as part of efforts to improve revenue performance, they would intensify tax compliance and plug existing revenue leakages.

“Investigations we have undertaken show inbound leakages on goods arriving in the country, significant outstanding tax debts, suspense regimes in the area of warehousing, transit trade, and free zones, and tax audit issues such as limited coverage, low auditor productivity, and low audit yields.

“We are rolling out major initiatives to address these tax compliance issues. These initiatives will include prosecutions of tax evaders and corrupt tax officials, a special VAT Attack Force to ensure enforcement and deepen VAT penetration from the current low levels of 11% and institutional reforms at GRA,” he added.

He said tax compliance would also be boosted by the implementation of the Common Platform for Communications Traffic Monitoring, revenue assurance, mobile money monitoring, and fraud management.

Ofori-Atta said the common platform would provide government with an accurate and comprehensive view of telecom revenues in order to verify tax compliance and to ensure the comprehensive billing and collection of all telecom-related taxes, levies, and regulatory fees.

Transfer-mispricing and tax evasion

He noted that several billions of cedis were lost every year due to transfer-mispricing and tax evasion, which led to a lower than expected tax-to-GDP ratio.

Audits of local and multinationals

The government, he said, will commission audits of local and multinational enterprises in mining, oil and gas, telecommunications services, transfer pricing and high-net-worth individuals to address transfer-mispricing and other forms of tax evasion.

Source: thefinderonline.com