The Minister for Finance, Ken Ofori-Atta, has said that government is expected to make about GHÂ¢ 500 million following the recalibration of VAT and its components.
According to him, although the new VAT structure will cost citizens more, its impact will not burden Ghanaians.
Speaking on Citi TVâ€™s current affairs show, The Point of View on Monday, Ken Ofori-Atta said the government will ultimately be able to reduce inflation by 2% at the end of the year due to the move.
â€œOur analysis indicates that 5% more for the reconstruction will have a much lower burden, sharing between the manufacturer and the retailer. Our appreciation is that by the end of the year, we would have knocked off about 2% of inflation. So we are seeing a situation that we are able to get some of the money that we require, but the hard work of bringing inflation down, weâ€™ll achieve that. I do get about half a billion because the levy runs through everything that you do,â€ Ken Ofori-Atta said.
While presenting the 2018 mid-year budget review before Parliament last Thursday, Mr. Ofori-Atta announced that â€œthere wonâ€™t be any increase in VATâ€ however he said that the National Health Insurance Levy (NHIL) and the GETFund, which are components from the VAT have been separated and will now have straight levies of 2.5 percent each.
â€œBoth the Health Insurance Fund and the GETFund levies will continue to be 2.5 percent each, while the applicable VAT rate is 12.5 percent,â€ he said.
The announcement has been met with mixed reactions especially from the public as some analysts including former Finance Minister, Seth Tekper, who have said that the restructured taxes will cost the Ghanaian consumer more for goods and services.
But according to Ken Ofori-Atta, the burden will not be felt much as the amount is only marginal.
While inflation declined to 10 percent in June 2018 from 11.8 percent in Dec 2017, according to Ofori-Atta, the government is hopeful that it will achieve an 8% inflation target by the end of 2018 as a result of the VAT restructure.