TUC urges President to reject additional 2.5% VAT rate

Accra, April 12, GNA - The Executive Board of the Trades Union Congress (TUC) on Wednesday, appealed to President Rawlings not to sign the bill approving an extra 2.5 per cent to the 10 per cent Value Added Tax (VAT) rate.

In a statement in Accra, it said the increase would worsen the financial plight of workers and farmers. It called on the President to reject the Bill and to return it to Parliament for re-consideration, if the government aims at enhancing the welfare of the people.

The statement signed by Mr Christian Appiah Agyei, Secretary-general of TUC, described the hike as insensitive and said other options should be explored to raise money to fund education.

It said that members of the Board viewed the decision of Parliament to pass the Bill, with dismay in view of the reluctance Ghanaians accepted the 10 per cent VAT rate introduced last year.

The Board expressed concern about "the insensitivity of Members of Parliament who turned a blind eye to the pleas of a wide section of the public against the rate increase and went ahead to pass the Bill".

The TUC said it was aware of the "difficulties the government seem to be going through to get the educational sector to function properly". The statement said that while the Board would support government's genuine efforts to revamp the educational system, it believes that a special VAT for education is not the best option considering the already low salaries and wages in the country.

It said that since the VAT Service exceeded its target of 700 billion cedis by 13.2 per cent, it would not be difficult to raise resources for education if the base of VAT is diversified.

The admission by the Minister of Employment and Social Welfare's that inflation last year averaged between 12 and 13 per cent while salaries increased by 15 per cent show that workers indeed earned only 1.2 per cent increase on their incomes.

The Board disagreed that the salary increase 'was a good sign and said, "the frequent increases in fuel prices since last year, coupled with the intended increase of VAT, would further impoverish workers.

The statement said TUC petitioned Parliament to reject the Bill and rather ask the government to find means of dragging all income earners into the tax net but it turned a deaf ear.