Minority fights govt over VAT
The Minority in Parliament yesterday chastised the government for the hike in the Value Added Tax (VAT) by 2.5 per cent and called on Ghanaians “to rise up to resist oppressor’s rule.”
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“Why did it become necessary for the hikes in utility tariff rates to be lowered and then the VAT rate to be increased so suddenly? Is it the case of double speak, Mr President?” it asked.
Addressing a press conference in Accra yesterday, the Minority Leader, Mr Osei Kyei-Mensah-Bonsu, said the net effect of the increase was that the purchasing power of consumers would contract.
But the Majority insists that the increase in the rate of VAT is long overdue, arguing that the upward review has become necessary for the government to raise more money to finance its development projects and programmes.
The Majority Leader, Dr Benjamin Kunbuor, told newsmen soon after the increase that notwithstanding that action, Ghana was still among the lowest VAT-rated countries in the world.
Parliament last Friday passed the Value Added Tax (VAT) Bill, 2013 and, in the process, increased the current rate of the tax from 12.5 per cent to 15 per cent.
But the Minority, who felt ambushed by the increase in the tax, walked out of the House before the First Deputy Speaker of Parliament, Mr Ebo Barton-Odro, pronounced the bill passed.
Issues
Articulating the position of the Minority, Mr Kyei-Mensah-Bonsu, however, stated that with the increase in the VAT, the standard of living among the generality of Ghanaians would be lowered further, especially at a time when the local currency was suffering continuous depreciation against major currencies.
“The economy will stagger and the projection of the government to raise an additional GH¢745 million is not likely to happen,” he said, adding,
“That is why the Minority is opposed to foisting the 2.5 per cent VAT rate increase, which in itself translates to 20 per cent in the existing rate, in this manner on the already overburdened taxpayers of the country.”
He said in moving the motion, the Deputy Minister of Finance, Mr Ato Baah Forson, alluded to the usage of proceeds from the increment for infrastructure development and wondered which infrastråucture development the government had in mind.
“If Parliament had taken time to interrogate the request by the President, Parliament then would be better positioned to trace and track the use of the new tax increase and thereby strengthen its oversight over the executive,” he said.
He said as it was now, Parliament had surrendered or weakened its oversight responsibility, adding, “It is a tragedy that Parliament should thus shoot itself in the foot.”
The Minority Leader was of the opinion that Ghana must remain very competitive in Africa and in particular the sub-region and wondered how the increase in the VAT rate was going to affect the country’s competitiveness in a holistic manner.
Procedures
Mr Kyei-Mensah-Bonsu explained that when the Deputy Finance Minister moved the motion to increase the rate of the VAT, he introduced new policy intent and principles into the bill that had already been read the second time.
“Indeed, the introduction of the VAT rate enhancement clause was inconsistent with an earlier decision of the House, which was that the rate of the VAT was 12.5 per cent,” the Minority Leader said.
He explained that Order 128 (4b) of Parliament provided that any amendment at that stage “must not be inconsistent with any clause already agreed to or any decision come to by the House”.
Mr Kyei-Mensah-Bonsu stated that the transaction of business that day, during which the VAT was increased, did not conform to known procedure.
“It was unorthodox; it was bizarre; it was all a mad rush,” he noted.
Majority Leader
However, Dr Kunbuor explained last Friday that Ghana’s neighbour, Burkina Faso, was charging VAT of 18 per cent; Burundi, 18 per cent; Cameroon, 19.2 per cent; Central African Republic, 19 per cent; Egypt, up to 25 per cent; Gabon, 18 per cent, and Morocco, 18 per cent.
He said Ghana should have increased the rate of VAT two years ago, adding that the government needed to increase the rate before the presentation of the 2014 budget.
He described the Minority’s action as regrettable, saying that they did not use the proper channel to walk out of the House to ensure that their action was captured by the official report of proceedings of the day.
