The Ministry of Finance and Economic Planning has tasked a technical committee to take another look at the law that mandates the Value Added Tax (VAT) Service to charge an ad valorem tax on packaged water. This follows comments by the chairman of the committee that drafted the law that his members did not impose the tax on sachet water. The outcome of the technical committee’s work will inform the position of the Ministry of Finance on whether consumers will be made to pay more on their sachet water or not. According a member of the Parliamentary Select Committee on Finance James Avedzi, the drafters of the law on ad valorem tax did not include sachet water in the list of items on which the tax was imposed. He said the committee had agreed that sachet water be excluded when it came up during their deliberations. “We have not imposed tax on sachet water; we have imposed tax on bottled water…the law that we passed says packaged bottled water (such as) voltic…are those that are going to attract taxes,” he said. The VAT Service and the Ministry of Finance have, however justified the inclusion of sachet water. According to Deputy Minister of Finance Seth Tekpe, though the law does not specifically mention sachet water, it comes under the packaged water category mentioned in the law. Meanwhile, Joy Business has learnt that the spirit behind the passage of the law was to change previous specific taxes to ad valorem. The packaged water producers therefore argue that because they were never made to pay the specific tax previously, they should not be made to pay the ad valorem. But Mr. Tekpe disagrees, stressing, “to the extent that certain products that should have been taxed previously were escaped in the tax net does not necessarily make it a new tax.” Mr. Tepke also argues that the ad valorem could also be described as an environmental tax for the pollution caused by used sachet water rubbers. “The tax was not targeting water – you know water is such an essential commodity…The tax is actually an imposition on the packaging material which, as you are aware, the packaging as well,” he said. Meanwhile, the VAT Commissioner Anthony Ewereko-Minlah does not understand the confusion. He tells Joy Business he will go ahead to charge until directed otherwise. Source: Joy Business/Myjoyonline.com/Ghana