The Ministry of Finance and Economic Planning on Tuesday dismissed claims that government had introduced a new tax in the 2010 budget, saying what it had sought to do was to improve the efficiency of the existing tax regime. This was being done through a shift from specific to 'ad-valorem' excise taxes on existing selected commodities and restoration of import duty on food imports, especially rice, wheat, maize and vegetable oil, the Ministry said in a statement issued in Accra. The statement signed by Mr Abdul Hakim Ahmed, Media Liaison at the Ministry of Finance and Economic Planning, said both the specific and ad-valorem taxes were designed to be revenue neutral, which means they raked in almost the same amount of revenue if used efficiently. It said government had identified several challenges with the use of specific rate on commodities such as tobacco products, beer and spirit. "These challenges have often led to massive loss of revenue to government due to the difficulty in interpreting a proper index for the 'specific rate', with concomitant negative effects on government's revenue and the efficiency and fairness of the tax system. It is for this reason that government has decided to move to ad-valorem rates. "Furthermore, the ad-valorem rates that are to apply to the said goods in the 2010 fiscal year are not a new phenomenon." The ministry said these had been in the Customs, Excise and Preventive Service's books since 1984/86 before the change in 2007. "The main objective of the shift from specific to ad-valorem is to maintain the tax rate that existed in the country prior to the introduction of the specific in 2007. The Harmonised Commodity Codes and the Tariff Schedule of 2004 of CEPS contains the entire rates that have been mentioned in the 2010 Budget." The statement said government has decided to restore the import duties on wheat, rice, maize and vegetable oil, which were removed in 2008 at the height of the global food crisis. "The global conditions that necessitated the removal of those duties have abated and government finds it pertinent to restore the duties in order to encourage local production, create jobs and conserve foreign exchange. "This development is not just welcome news and an incentive to our local farmers but also fits into the social democratic values of this government." The ministry said the duties before they were removed in 2008 were: wheat 10 per cent; rice 20 per cent; vegetable oil 20 per cent and maize 20 per cent. Source: GNA