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Minister of Finance, Ken Ofori-Atta, has disclosed that contrary to speculations government will not increase the Value Added Tax (VAT) from 17.5 percent to 21 percent.
He said this while presenting the 2018 Mid-Year Budget Review in Parliament yesterday.
There have been wild rumours that government will increase VAT which caused panic among many Ghanaians recently.
That was after a leading member of the ruling New Patriotic Party (NPP), Gabby Otchere-Darko, had reportedly asked Ghanaians on Facebook whether they would be willing to pay additional taxes for better development.
Mr. Otchere-Darko quizzed: “Will you support a VAT increase to keep your lights on, your secondary schools filled, your school kids fed, your streets clean, your streets safe, young graduates employed, and decent, affordable homes built for working families?”
But Mr. Ofori-Atta told Parliament that “I will like to inform the House, Mr. Speaker, that there will be no increase in VAT.”
According to him, collection of taxes should elicit socially desirable outcomes such as better environment and not impose undue burden on the masses.
He stated that the country’s economy responded positively to the numerous tax cuts in 2017 and that government was not in the position to increase VAT.
“Last year, we abolished numerous taxes. The scale of tax reductions has never been implemented in the 60 years of Ghana’s economic history since independence.
“The evidence shows that the economy has responded positively to these tax cuts. What is also clear to us, Mr. Speaker, is that we are not collecting as much as we should.”
“The solution to addressing the tax collection deficit is not necessarily the imposition of many taxes.”
He noted that government has been able to grant tax relief of over GH¢800 million to businesses and households through the abolishment of “nuisance taxes.”
Stop Social Media Economics
The Finance Minister cautioned critics of the economic management team of the Akufo-Addo administration, particularly the NDC, against media economics.
“I will also like to advise our friends that we should stop taking directions on economic policies from social media,” he said to spontaneous cheers from members of the Majority in Parliament.
Based on the fiscal performance of the country’s economy, he said government had programmed measures to ensure that it meets the fiscal target of 4.5 percent of GDP at the end of the year.
He stated that government would ensure compliance with existing tax laws, plug the leakages in the existing system, ensure value for money for the expenditure that government undertakes and ensure that the wealthy also pay their fair share.
Improvement In Livelihood
Touching on the living standards of Ghanaians across the country, the Minister explained that “on the socio-economic front, the Akufo-Addo Government has eased the burden of hundreds of thousands of Ghanaians and invested in the future of our children and our country.”
The Finance Minister added: “We implemented the free Senior High School (SHS) Programme, which has given opportunity to over 90,000 additional teenagers to access high school education. This major programme has saved parents a minimum of GH¢3,000 and GH¢1,950 per student per academic year for boarding students and day students respectively.
“We increased the School Feeding Programme from 1.6 million children to 2.1 million and also increased the amount spent on each child by 25 percent. We added more than 150,000 households to the LEAD programme, thereby increasing their livelihoods.”
“Mr. Speaker, after seven years of agitation by public sector workers demanding that their pension funds be transferred to their schemes to be managed, we transferred the total amount of GH¢3,001.73 million, being the total value of funds in the Temporary Pension Fund Account and restored workers pension funds to the five public sector pension schemes, something that the previous regime had been unable to do for seven years,” according to the Minister.
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