The Finance Minister Ken Ofori-Atta has announced fiscal measures in the 2018 mid-year budget to enable the government to meet its revenue target.
Delivering the mid-year budget in Parliament on Thursday, 19 July 2018, Mr. Ofori-Atta said the revenue collection agencies under performed in the first five months of 2018 hence it has become imperative for the government to “immediately implement some fiscal measures” to close the gap.
“Based on the under performance for the first five months of 2018, we will end the year with an estimated deficit of 4.9% of GDP compared to the programmed target of 4.5%, resulting in a fiscal gap of GHs870 million, unless we immediately implement some fiscal measures,” the Finance Minister stated.
He announced the new revenue measures thus: “Intensive Conversion of NHIL (2.5%) to a straight levy, Conversion of GETFund VAT rate of 2.5% to a straight levy, Imposition of luxury vehicle tax of GH¢1,000-GH¢2,000 on non-commercial vehicles with capacity of 3.0 litres and above and a review of PIT to include an additional band of GH¢10,000 and above per month at a rate of 35% and downward adjustment discretionary expenditures.”
Prior to today’s budget presentation, the Minority side of Parliament had hinted the government is planning to increase VAT. However, Mr. Ofori-Atta was emphatic stating “I wish to assure the House that VAT will not be increased.”
He added: “We aren’t collecting as much as we should but that does not mean increasing taxes is the way solution.
“We are intensifying tax compliance measures to make sure we collect the taxes due us. We can make sure that we collect enough revenue from tax if we ensure compliance, ensure value for money and ensure leakages are plugged.”