Parliament yesterday passed the Value Added Tax
(VAT) Bill, 2013 and, in the process, increased the current rate of the
tax from 12.5 per cent to 15 per cent.
But the Minority, who felt ambushed by the increase
in the tax, walked out of the House before the First Deputy Speaker of
Parliament, Mr Ebo Barton-Odro, pronounced the bill passed.
There was chaos as a result of a shouting bout when
a Deputy Minister of Finance, Mr Ato Baah Forson’s last-minute proposed
amendment of Clause 3 of the bill resulted in the VAT increase to 15
per cent.
Clause 3 of the bill, before it was amended, read:
“Except as otherwise provided in this act, the rate of the tax is 12.5
per cent and calculated on the value of the taxable supply of goods and
services or on the value of the import.”
The bill, which was introduced to the House in
July, this year, had gone through all its processes of passage: that is,
the first and second readings and the consideration stage and was ready
to go through the third reading and pronounced passed yesterday.
But the Chairman of the Finance Committee of
Parliament, Mr James Klutse Avedzi, called for the bill to go through a
second consideration stage, which paved the way for Mr Forson to propose
the amendment for the increase in the rate.
With that, the 2.5 per cent increase translates to 20 per cent when its comes to the goods and services which attract VAT.
The Amendment
Proposing the amendment, Mr Forson said Ghana was
now a middle-income country and, therefore, the availability of
concessionary loans, aids and grants was considerably reduced.
The cost of borrowing, according to him, was higher
on the world market, adding that Ghana must strike the balance between
external borrowing and internal resource mobilisation.
He said VAT was a mechanism that would enable the
country to raise resources, emphasising that the bill exempted basic
foods, aquatic products, animal, transport, health and educational
materials.
Mr Forson explained that the 2.5 per cent increase
would enable the government to raise an additional GH¢745 million a year
to support the capital development portion of the 2014 budget.
“From 2015 onwards, the whole amount will be put
into an infrastructural development fund from which investment projects
will be funded,” he explained further.
Without much debate on the matter, Mr Barton-Odro put the question and ruled for the amendment to become part of the bill.
Not satisfied with the haste with which the
amendment had been carried out, the Minority raised the question of
procedure, but the Majority Leader, Dr Benjamin Kunbuor, explained that
there was no need for amendments during the consideration stage of a
bill to be seconded.
In the ensuing melee, MPs from both sides of the House started shouting and pointing their hands at one another.
It was at that stage that the Minority, led by its Leader, Mr Osei Kyei-Mensah-Bonsu, walked out.
Notwithstanding their action, the Majority passed the bill.
Minority press conference
Soon after walking out of the chamber, the Minority organised a press conference to explain why it took such an action.
Mr Kyei-Mensah-Bonsu described the increase in the
VAT rate as “a day of shame”, explaining that there was nothing in the
bill which gave an indication of the government’s intention to increase
the rate of the tax.
“We were supposed to conclude the consideration
stage yesterday, yet they brought a nocturnal addendum to increase the
rate of the VAT. This is dangerous,” he said, adding that the inclusion
of the National Health Insurance Levy would increase the levy to 17.5
per cent.
He wondered why the Majority decided to spring the increase on the Minority as a surprise.
“There is massive corruption in the system. They
should tell us what they are doing to plug the loopholes. That is our
concern,” he charged.
“We have washed our hands off the increase in the
rate, hence our decision to withdraw from the deliberations. The
Speaker’s conduct is most reprehensible,” he said.
The Minority Spokesperson on Finance, Dr Anthony
Akoto Osei, said the issue was not discussed at the committee level,
adding that no motion of amendment was proposed by anyone.
“It is worse than a military dictatorship. You don’t set a precedence that undermines the authority of Parliament,” he stated.
Majority Leader’s explanation
Speaking to the press later, Dr Kunbuor said
notwithstanding the increase, Ghana was among the lowest VAT rated
countries in the world.
He explained that Burkina Faso was charging 18 per
cent; Burundi, 18 per cent; Cameroon, 19.2 per cent; Central African
Republic, 19 per cent; Egypt, up to 25 per cent; Gabon, 18 per cent, and
Morocco, 18 per cent.
He said Ghana should have increased the rate of VAT
last two years, adding that the government needed to increase the rate
before the presentation of the 2014 budget.
He described the Minority’s action as regrettable,
saying that they did not use the proper channel to walk out of the House
to ensure that their action was captured by the official report of
proceedings of the day.
Dr Kunbuor said there was no breach of procedure as
had been indicated by the Minority and expressed the hope that there
was still room for dialogue.
Source: DailyGraphic
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