VAT replaces condom, other taxes
The Value Added Tax (VAT), raised to 15 percent following a 2.5 percent increase last week by Parliament, is set to replace a number of taxes, according to Finance and Economic Planning Minister Seth Terkper.
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The Minister was addressing Parliament at the presentation of the 2014 Budget Statement and Economic Policy of the government.
The following is what he said in relation the Value Added Tax.
Earlier this year, parliament approved some Tax measures to complement efforts to stabilize the economic situation.
Ghana has a liberal tax regime that was engineered in the 1980s and 1990s; hence, parliament reversed the trend this year.
Last week parliament passed a new VAT Act that increases the rate to 15 percent, including 2.5 percent of National Health Insurance levy.
It is proposed that in addition to stabilizing the fiscal situation; the entire amount from the 2.5 percent VAT would be dedicated to the ongoing infrastructure and development project under the proposed Infrastructure Funds before parliament.
In line with the objective of maintaining a liberal tax regime, it is proposed that an amendment would be considered and approved by parliament.
The national fiscal stabilization levy, which is expected to end by close of December 2014, will now terminate as at June 2014.
The special import levy scheduled to end in June 2015 would now end by the close of 2014.
Parliament proposed that the following should specifically be exempted from the special import levy with immediate effect - agricultural and fishing inputs, including cutlasses and outboard motors and fishing nets; medical supplies including condoms, educational materials and energy bulbs that were exempted from imports under the original Customs Service.
The preference for VAT is more efficient and also enhances compliance. It is proposed that, the dedication of the VAT to infrastructure development should pass through the appropriation process.
