Reconsider Luxury Vehicle Tax – CSO

A Policy, Research and Advocacy Organisation, SEND-Ghana, has called on government to consider reintroducing the Luxury Vehicle tax after it has carefully addressed previous challenges associated with its implementation.

The civil society organisation believed that government stood to shore up its revenue and equitably share the existing economic burden of indebtedness if it considered the implementation of the luxury vehicle tax and other progressive tax such as the high-income earner tax which were introduced in the 2018 mid-year budget review and repealed in less than a year.

“Other progressive tax measures such as enhancing the efficiency in the collection of property taxation, taxing high net worth individuals, reducing excessive tax holidays for multinational companies, should have been looked at,” said George Osei-Bimpeh, Country Director of SEND-GHANA.

He was addressing the media on Monday at a preliminary assessment of the 2021 Budget Statement and Economic Policy.

The organisation expressed worry over the decreasing tax-to Gross Domestic Product (GDP) ratio over the past three years where 16.5 per cent was recorded in 2018, 13.1 per cent in 2019 and 12.4 per cent in 2020.

This according to the Country Director was below the median tax-to-GDP ratio of 19.1 per cent in Africa and 26.2 per cent globally.

“Research has shown that once the tax revenue as a percentage of GDP reaches around 15 per cent, GDP per capita increases sharply, and thus it ensures that the country has the money necessary to invest in the future and achieve sustainable economic growth,” he said.

In commending government for the new tax proposals, SEND-Ghana cautioned that much focus should not be based on consumption which in effect could further burden the vulnerable.

“The increase in the VAT rate and the Petroleum taxes have multiplier effect on all other sectors. These will obviously translate into high public transport fare, cost of food and other basic goods and services consumed by all, with the poor feeling the brunt more,” said Mr Osei-Bimpeh.

He therefore appealed to government to “target the haves instead of burdening the have-nots, too with the same taxes.”

“Progressive taxation, where corporations and the richest individuals are taxed more in order to redistribute resources, is the way to go as far as governments quest to reducing inequality is concerned,” he added.

By Issah Mohammed