Parliament of Ghana
There was drama in Parliament yesterday when the leadership of the Ghana Union of Traders Association (GUTA) held a crunch meeting with the Finance Committee of Parliament, Minister of Finance and representatives of Association of Ghana Industries (AGI), Food and Beverage Association of Ghana, Importers and Exporters Association of Ghana and National Electrical Dealers Association, who had raised serious concerns over the three percent flat VAT Rate on goods and services.
During the meeting, the GUTA Executives, led by the president, George Ofori, called on Parliament to maintain the three percent flat rate, because it will help members of the Association and also reduce the cost of trading.
“Mr. Chairman, please let it be known that the vast majority of traders, wholesalers and retailers as the VAT Flat Rate Scheme (VFRS) captures, are in support of the scheme. We consider it to be a key intervention of government that will go a long way to even help us grow our businesses while simplifying our tax calculation,” the GUTA petition said.
The GUTA wondered how the new rate will lead to the increase in prices of goods and services, since it is matter of calculation and if done right, it will not result in any changes in prices, as the Committee is being made to understand.
He added that it will be prudent that the VFRS closes certain loopholes that could be exploited.
The crunch meeting was called by the Finance Committee after the AGI and the Food and Beverage Association of Ghana had petitioned Parliament over the introduction of the new flat rate, which they argue will lead to the collapse of several industries, large-scale unemployment and general increase in the cost of living resulting from corresponding increases in the price of goods and services.
The Minister of Finance, Ken Ofori-Atta, a Deputy Minister of Finance, Kwaku Kwarteng and other officials of the ministry met the Finance Committee, together with officials of AGI and Food and Beverages Association of Ghana, Importers and Exporters Association of Ghana and National Electrical Dealers Association, to discuss their concerns over the new flat VAT rate, which is to replace the previous 17.5% VAT rate.
Interestingly after the meeting, which was held behind closed doors, members of the minority National Democratic Congress (NDC) courted the groups opposing the imposition of the flat VAT rate, particularly the AGI, to hold a press conference to kick against the new VAT rate.
The Majority New Patriotic Party (NPP) members also attempted to pull the same media for a similar press conference at the same time, with the media stuck in the middle.
The Finance Minister told the media after the meeting that it would be impossible to reverse the new rate, but the ministry will continue to engage those groups who had raised concerns to properly educate them on the introduction of the new VAT, saying the new rate is not only lower but more equitable and transparent.
The new tax is good for the country, as it will eliminate tax evasion. The calculation would be simpler and would be deductible from income tax.
The Finance Minister added that the ministry will continue to engage those who do not have a good understanding of the operation of the VAT rate, adding that on Monday, the Ministry will meet them again to help smoothen rough edges of the new tax and allay their fears since the old 17.5% VAT rate also had some serious cascading effect.
The minority, led by the ranking member of Finance, Ato Forson, said the minority would resist the implementation of the new VAT rate.
It expressed its readiness to proceed to court over the new VAT rate.
By Thomas Fosu Jnr