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Business News of Tuesday, 17 July 2018


Minority rejects VAT hike

The Minority National Democratic Congress (NDC) in parliament has strongly kicked against the attempt by government to increase Value Added Tax (VAT) from 17.5% to a proposed 21.5% which it said is a lazy approach to revenue generation that will ultimately bring untold hardship to Ghanaians.

The minority made the strong stance against the proposed increment that would be announced by the Finance Minister in parliament during the presentation of the midyear review at a symposium yesterday on its perspectives on the mid-year economic performance and projections.

Speaking at the Economic Forum yesterday, the spokesperson of the minority on Finance and MP for Ajumako/Enyan/Essiam, Cassiel Ato Forson said the government’s worrying revenue predicament is self-inflicted and it is the result of populist policies to scrap some taxes.

“The New Patriotic Party (NPP) government is lacking vision to solve the current economic challenges facing the country”.

According to the minority spokesperson, increasing VAT will rather directly affect purchasing power of Ghanaians and also affect businesses in the country and make cost of living unbearable for Ghanaians.

“We in the minority will fiercely resist any such attempt because it is not the best way to solve the shortfalls in revenue generation,’ he averred.

He said what the economic management team of the ruling party should have done was to broaden the tax base of the country by broadening the base of the financial services sector as well as the real estate industry.

He observed that despite the huge increase in revenue from the oil sector, government is choked and suffering from lack of resources because of gross mismanagement of the fiscal regime and huge increase in fiscal expenditure.

He warned that the economic indicators in the country now are very worrying and that Ghanaians must position themselves for more hardship under the NPP government.

He said the country’s fiscal deficit has been projected to go down to 4.5percent in 2018, according to the International Monetary Fund (IMF).

“The projected deficit target of 4.5 percent would be missed due to huge deviations in revenue and expenditure and the financial sector related cost” the ranking member on Finance said.

According to Ato Forson, government is accumulating arrears and sweeping them under the carpet.

He indicated that large fiscal slippages are being created by the government’s inability to raise the needed additional revenue to meet the unrealistic promises that are increasing expenditures.

According to the minority, the government intends to follow through a plan of raising GH¢3.8billion from selling state assets like the Volta River Authority (VRA), prepayment of license fees, and monetization of mineral royalty

“The Public Debt is expected to increase further by GH¢3.8 billion and will add up to the total borrowing of GH¢26 billion in 2017 which will bring the projected total debt of the country by the end of December to GH¢173 billion”

The minority leader, Haruna Iddrisu for his part, said the NPP government has been very unfaithful and disingenuous to Ghanaians after saying it was prepared to move the economy from taxation to production but now it is rather moving it from taxation to taxation.