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Business News of Friday, 5 July 2019


Luxury vehicle tax is a good tax, no reason to scrap it - Premium Motors CEO

The Chief Executive Officer of Premium Motors says the luxury vehicle tax introduced last year is a good tax and there is no reason to scrap it.

Jihad Hijazi said “…there is no reason to scrap the luxury vehicle tax, I believe it is a good tax because the tax itself is not a prohibitive tax. It’s a tax that is levied on vehicles that in my opinion are not always a necessity…”

Speaking in an exclusive interview with JoyBusiness, Mr Hijazi, however, said using engine capacity to describe a luxury vehicle is inappropriate.

He advised government to restructure the luxury vehicle tax to exclude vehicles use for business and concentrate on taxing the cars with comfort and has engine capacity above 3.0cc.

"The definition of luxury has little to do with engine capacity. Technology is rapidly developing, rapidly advancing and what this means is that we can have super vehicles, very expensive vehicles, luxury vehicles with much smaller engines like 1.5-litre engines. However, locally we have used engine capacity to classify a car as a luxury".

Review of the tax

Finance Minister Ken Ofori-Atta has indicated that the luxury vehicle tax introduced last year would be reviewed in the mid-year budget review.

Speaking at a press briefing last Friday, Mr Ofori-Atta said the decision to review the tax was influenced by some stakeholder engagements.

Mr Ofori-Atta introduced luxury vehicle tax last July in the government’s Mid-Year Budget Review.

The government at the time said the move was to raise more revenue by taxing the wealthy a little more.

According to the law, vehicles with engine capacities of 3.0 – 3.5 litres will attract an annual tax of GH¢1,000; those with engine capacities of 3.6 – 4.0 litres will pay GH¢1,500 annually; while 4.1 litres and above are to an annual tax of GH¢2000.

According to the finance minister, consideration is being given to the luxury vehicle tax in the yet to be presented Mid-year budget in parliament.

Demo against the tax

A coalition of car dealers and owners in March this year staged a demonstration against the luxury vehicle tax in Accra.

They drove their vehicles in a convoy through some principal streets, protesting the levy which was introduced by the government in August 2018 specifically for vehicles with engine capacity of 3.0 litres and above.

Dubbed: “Bobolebobo demonstration”, the demonstrators were from the Vehicle and Asset Dealers Association of Ghana (VADAG), National Concerned Spare Parts Dealers Association, True Drivers Union, Concerned Drivers Association, Ghana Committed Drivers Association and Chamber of Petroleum Consumers.