The Deputy Minority leader is accusing the Finance Minister of peddling an untruth when he said the VAT rate will not be increased.

James Avedzi insists the government, through the Finance Minister has increased VAT “through the backdoor.”

In a mid-year budget review presentation, the minister, Ken Ofori Atta said the government will be converting the GETFund of 2.5% on the VAT to a straight levy of 2.5%. Additionally, there will also be the conversion of the NHIS of 2.5% on VAT to a straight levy.

He also announced a new tax on luxury vehicles as well on high-income earners who take over a ¢10,000 income per month.

There had been suggestions prior to the reading of Thursday’s budget that government was going to increase the VAT rate from 17% to 21% to make for government’s revenue shortfalls.

But the Finance Minister vehemently stated there will be no increase in VAT and charged critics to stop taking economic policy lessons on social media.

His deputy Kweku Kwarteng has described the new tax regime as progressive.

He admitted the changes in the VAT regime as announced by the Minister will make the consumer pay slightly higher on products than they used to pay.

With the new taxes, Mr Kwarteng said ministers, deputy ministers and Members of Parliament who earn over ¢10,000 in salary will be made to pay and contribute more to the national kitty.

But James Avedzi is not impressed. He told Joy Business’ George Wiafe the Finance Minister has disingenuously increased the VAT despite the public façade about non-increase.

James Avedzi

According to him, the GETFund and NHIA fund which will now be levies on their own will prove more costly than what pertained in the past.

“The impact is greater than even imposing a 1 or 2% VAT rate he said, adding, “Consumers are going to pay more.”

On the way forward, Mr Avedzi said the government must rather concentrate on tax compliance like it said it will do.

The total taxable population in Ghana is six million people. However, only two million people are said to be paying their taxes.

The Deputy Minority Leader said the government must put stringent measures in place to collect the taxes from people who are not paying.