Former Minister of Finance under the Mahama administration, Seth Terpker has strongly contested government’s claim that it has not increased VAT in the 2018 mid-year review budget.

Ken Ofori Attah the Finance Minister on Thursday 19 July 2018 categorically stated in Parliament during the budget presentation that VAT will not be increased contrary to wide speculation

“I wish to assure the House that VAT will not be increased. I would like to advise our friends in the opposition that they should stop taking policy direction on the economy from social media.”

Delivering his statement, he announced that as part of the new revenue measures, the government will now levy the NHIL and GetFUND separately.
“Both 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. Government is therefore, consolidating contributions to the Health Insurance Fund Levy and the GETFund portion of the VAT into a separate Health and Education Levy. This will enable the Government isolate and increase the budget for health and education,” Mr. Ofori-Atta revealed.

But in a sharp response, Mr. Terpker urged Ghanaians not to jubilate the Finance Minister has been economical with the truth.
“Ghana’s VAT rate is 17.5 percent and that includes NHIL (2.5%) and GETFund (2.5 %). Removing them from the VAT base and making them specific rates (instead of ad valorem) and increasing that rate to earn more revenue (quoting Hon Kwarteng) is a ruse.

“It is a VAT increase in disguise. Businesses should not rejoice yet because they cannot claim Input Tax Credit/refunds on 5% of the current 17.5 percent rate.

“Already, the Flat Rate is denying some registered businesses refunds and Input Tax Credit.

“The measure amounts to a parallel Sales Tax regime that the VAT replaced. It is a retrogressive step and further mutilation of the VAT regime,” Mr. Terkper explained.


-Kasapa