Abuse of VAT on the increase - Survey

Accra (Greater Accra) 18 March '99

Nearly three months after the reintroduction of the Value Added Tax (VAT) and over one year of sustained public education, drivers and other selfish individuals are abusing the system to the detriment of consumers, according to a survey conducted by the Information Services Department (ISD). The survey carried out in collaboration with the VAT Secretariat in February assessed the impact of the new tax system on prices of goods, transportation and farm implement. Areas covered included Bawku East, Shama Ahanta East, Twifo-Hemang Lower Denkyira and Komenda-Eguafo-Abirem districts in the Upper East, Western and Central regions in that order. The survey established that drivers especially in the rural communities have increased transport fares arbitrarily. In the Bawku East the drivers have increased the charge for conveying food items. The report did not quote the figure and the percentage increase. The survey said this is contrary to the expectation of the VAT Secretariat because tax on lubricants has been reduced from the 15 per cent under the sales and service tax regime to 10 per cent under VAT. In the Shama Ahanta East District, prices of fishing input have shot up. The survey said prices of farm implement such as cutlasses and hoes have also increased in the Komenda-Eguafo-Abirem areas, although such items are exempted under the VAT Law. In the Twifo-Hemang-Lower-Denkyira, drivers were charging VAT. In an interview with the Ghana News Agency on the survey report, an official of the Public Relations Directorate of the VAT Service said the drivers in the Twifo-Hemang-Lower Denkyira have been compelled to rescind their decision to charge VAT. The source also confirmed that some firms, qualified to charge VAT in the regions and districts, have refused to register. It cautioned the offenders to refrain from the act saying the law will be enforced to the letter.