2.5% VAT revenue goes into infrastructure, 2014 Budget confirms
 
Posted on: 2013-Nov-19        
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Finance Minister, Seth Terkper has said the controversial 2.5 per cent Value Added Tax (VAT) increase will be dedicated exclusively for infrastructural development.

Presenting the 2014 Budget Statement on the floor of Parliament, Tuesday, the minister also announced a number of tax rebates geared towards ameliorating the impact the new VAT increase would have on the citizenry.

The VAT rate is now 15 per cent following last Friday's controversial passage into law of the new VAT ACT which inherently had 2.5 per cent increase in the rate.

The minority walked out of the chamber and washed its hands off the passage of VAT Bill into law, accusing government and the majority of insensitivity and parliamentary procedural breaches.

The Minority Leader Osei Kyei Mensah Bonsu quickly held a press conference accusing the majority of not dialoguing with the minority before attempting to increase the VAT rate from 12.5 per cent to 15 per cent.

He said no member of the minority knew why the rate was increased and what the revenue accrued from the increased rate would be used for. He demanded explanation from government, adding that it may well be the case that the increases would not be necessary if government were to pluck the leakages and reckless spending.

In what appears to be a response to the concerns of the Minority, the Finance Minister told Parliament "the entire amount from the 2.5 per cent VAT will be dedicated to the ongoing infrastructural and development drive under the proposed infrastructural fund to be discussed later."

The minister further announced variations in the country's tax regime. He said the special import levy which was expected to terminate in June 2015 will now end in 2014.

Agricultural levy on imported cutlasses, medical supplies, including condoms and educational material have all been removed, the minister promised.

The almost three hour budget presentation laden with cheers and boos from the majority and minority side of the house, saw the minister touching on several areas of the economy including health, social and infrastructural development, oil and gas, sports and accountable governance.

Under the theme "stable, united, inclusive and prosperous country with opportunities for all and reinforce the foundation of socio-economic transformation in partnership with the private sector" the minister reiterated the president's commitment to enhance the better Ghana agenda.

He said the 2014 budget, anchored on four main pillars, will put people first by addressing human development issues through decent work for all. It will also ensure a strong and resilient economy; expand strategic infrastructure especially in oil and gas; strategic roads, sports and enhancing transparent, decentralise and accountable government.

He also hinted of the stringent implementation of the automatic price adjustment aimed at removing subsidies on petroleum and utility prices.

The budget is expected to be debated and hopefully approved.