Criticisms Against VAT Not Valid - Blankson

Sunyani,(Brong Ahafo Region) 10 Oct . A Deputy Director of the VAT project, Mr George Blankson, has described as invalid, criticisms that the value added tax system is inflationary and retrogressive and would therefore hit the poor harder than the rich if adopted. He said under the VAT bill, food and other items patronised mostly by the poor are VAT free and maintained that prices of commodities and services would not rise beyond 3.5 per cent to fuel inflation if even the VAT is pegged at 15 per cent. Mr Blankson was delivering a paper today on ''the shift from sales and service taxes to VAT: justification and policy implications'' at a two-day seminar on VAT which opened at Sunyani yesterday. The seminar is being organised by the VAT project for 140 personnel drawn from the national mobilisation programme (NMP) and the Ghana national association of teachers (GNAT) in the Northern sector of the country. The participants are expected to act as facilitators in the educational drive of the VAT project to ensure a widespread understanding and acceptance of the new tax system. Mr Blankson said VAT is a logical component of the tax reform needed to reduce the country's risky over-reliance on petroleum revenue for development. He said not only would the VAT lead to increased tax compliance, it would also boost industrial growth because manufacturers would have access to interest free funds from output tax collected for 45 days before payment. Mr Blankson said the 45 days' Grace period is a marked improvement over the 25 days by manufacturers under the present tax system. He said with the economic community of West African States setting 1999 as the deadline for all member states to adopt the VAT system, there is the need for a national commitment to its implementation.