Ghanaians have reacted strongly to government’s Mid-year Budget Review that was presented by the Finance Minister, Ken Ofori-Atta on the floor of Parliament Thursday, July 19.

Among other things, Finance Minister while reading the budget announced that government will not increase the Value Added Tax (VAT) contrary to earlier reports, rather, a new tax on luxury vehicles which will be known as Luxury Vehicle Tax will be introduced.

He allayed fears of any increase in either Value Added Tax or National Health Insurance Levy and indicated that government will intensify tax compliance to increase its revenue base.

Ahead of the reading, there were rumours that there may be an increase in VAT and NHIL from 17.5 percent to 21.5 percent. The Minority in Parliament also held a press conference to predict the announcement of a barrage of new taxes and reintroduce some old taxes scrapped in the 2017 budget in the mid-year budget review stressing how the new taxes could affect businesses and the cost of living.

Ken Ofori-Atta however during his presentation emphatically said, “I wish to assure the house that VAT will not be increased” and that the current VAT rate of 17.5 percent will be maintained.



He further revealed that government is set to introduce a new levy on vehicles with engine capacities of 3.0 litres and above. According to government, the levy will be paid on first registration and subsequently annually during renewal.

“Government proposes to introduce a luxury vehicle levy on vehicles with engine capacities of 3.0 litres and above. The levy will be paid on first registration and subsequently at annual renewal,” he said.
Mr. Ofori-Atta however assured that commercial vehicles will not be included in the levy.

“Commercial vehicles will be exempted from this policy.”



Reacting to this, some section of Ghanaians believe the policy by government is a way of robbing Peter to pay Paul because although he did not increase the VAT as promised, he found a way of retrieving money from Ghanaians by imposing taxes on luxury cars.

They questioned the policy explaining that such cars are already paying huge taxes upon importation, adding that this will be a burden on both car owners and importers.

Others however are of the view that it is a good move by the government because the underprivileged won’t be affected since there is no increment in the VAT and commercial vehicle owners won't be affected with the tax on luxury cars.

They rather commended government for this huge effort and sacrifice made to benefit the low and middle-income earners in the country.