VAT Suspended

The controversial Value Added Tax (VAT) which has attracted public criticism since its introduction on March 1 has been suspended indefinitely. Finance Minister, Dr Kwesi Botchwey is expected to withdraw the VAT Amendment Bill formally at today's sitting of Parliament. A statement signed by the Information Minister, Mr Kofi Totobi Quakyi said last night that the Sales Tax will be reintroduced and will remain in force until a new implementation programme is announced Appropriate legislation will be introduced in Parliament. The statement noted that the implementation of the VAT "has left a lot to be desired", even though the principle behind the tax is acceptable and defensible

It said the government is aware that while further debate and discussion on the proposals to review is necesary, the situation is having a negative impact on the economy.

For the past few months importers have adopted wait-and-see attitude as the debate ove the future of VAT continues. Besides, it has adversly affected production and supply of goods and is consequently affecting prices. In a wider reprecussion, the situation will affect a number of projects and slow down the momentum of the country's development.

The chequered history of the VAT began with a section of the public complaining about linadequate education before its introduction Again, the 17.5 per cent level was compunded by the uncertainty over the mode of calculation

What is more, the infant VAT Service lacked effective monitoring It will be recalled that in the first month of the VAT the government initiated a review of the implementation with the intention to remove the bottlenecks

Later the Finance Minister announced some interim administrative measures which sought to broaden the list of exemption especially to manu-facturing sector.

The Information Ministry was tasked to assume direct public education on the VAT whilst consultations were going on. On May 17, the Finance Minister laid a bill before the House seeking to amend the level to 15 per cent and the minimum turnover raised from C25 million to C50 million. This was virtually a return to the Sales Tax before this year's budget. What broke the camels back was the fact that the Finance Committee of the House Proposed 10 per cent and the Finance Minister is expected to throw more light on the issue today. The VAT has also led to demonstrations and closures of shops over the past few weeks.