The Minority caucus in Parliament is demanding a reevaluation of the proposed 2.5% increase in the Value Added Tax.
Addressing the media, the ranking member of the Parliament’s Trade, Industry, and Tourism Committee, Emmanuel Armah Kofi Buah, lamented the effect of such a decision on customers in a statement to journalists.
He bemoaned the difficulties Ghanaians already faced as a result of the cedi’s weak performance against the majority of major foreign currencies.
He claimed that because consumers will be responsible for paying the tax’s cost and collection, the increase in VAT will have a highly negative impact on consumers and drive up the cost of items on the Ghanaian market.
“In the midst of the cedi losing over 50 percent of its value, high interest rates, you take the cedi, and it has depreciated so much, and we are talking about increasing VAT. What that really means is that ultimately, this is going to be passed on to consumers. It means the consumers must be brazing themselves for really high prices, more than what we currently have.”
He, therefore, admonished the government to consider short-term measures.
“As we discuss the economy and how we get out, the short-term measures are important, otherwise the crises are going to be so much.”
Finance Minister, Ken Ofori-Atta, while presenting the 2023 budget in parliament on Thursday, November 24, 2022, announced a 2.5% increase in VAT, as part of government’s several means of “aggressively mobilising domestic revenue” that will be used to “directly support our [Ghana’s] roads and digitalization agenda.”
Following the minister’s announcement, many Ghanaians, particularly traders, were dissatisfied because the 2.5% increase meant a jump in VAT from 12.5% to 15%, a development they are aware will have a significant impact on the costs of goods and services.
“Mr. Speaker, the demand for roads has become the cry of many communities in the country. Unfortunately, with the current economic difficulties and the absence of a dedicated source of funding for road construction, it is difficult to meet these demands. In that regard, we are proposing the implementation of new revenue measures. The major one is an increase in the VAT rate by 2.5 percentage points.”
Source: The Independent Ghana
