A Tax Analyst, Timore Francis Boi, has kicked against suggestions that the Value Added Tax (VAT) of 12.5 should be reduced for players in the hospitality, tourism, and aviation sectors due to the severe impact of COVID-19 on those sectors.
According to him, there is no assurance that such a reduction will reflect in price changes and boost demand.
His call comes after global auditing giant, Deloitte, in its post-Mid-year Budget analysis report, proposed among other measures, the implementation of a COVID-19 tax amnesty for six months, to provide waivers for interest and penalties; reduction of Corporate Income Tax (CIT) rate to 20 percent for 2-3 years for most-affected industries – i.e. hospitality, tourism, aviation, private schools; and target sectors for growth such as the pharmaceutical industry.
Speaking to Citi Business News, Mr. Boi further urged government to rather restructure the tax system to improve collection from areas that have been neglected for long.
He also appealed to government to enhance the distribution of its stimulus packages.
Tax collection has always been the largest source of revenue to government. But following the outbreak of the novel Coronavirus, many countries including Ghana, have been forced to find other sources of revenue mobilisation. In Ghana, one source of revenue generation is through Indirect Taxes, which are collected by entities in the supply chain and paid to the government.
This tax is mostly passed on to the consumer as part of the purchase price of goods or services.
This includes excise duties on fuel and liquor, customs, excise and preventive services, as well as consumption taxes such as the Value Added Tax.
The standard VAT rate is 12.5 percent calculated on the value of the taxable supply of goods or services or the value of import.
Source:Fiilafmonline/ CitiBuss
