Users of vehicles with an engine capacity of 2.9 litres and above can now heave a sigh of relief following the withdrawal of the Luxury Vehicles Levy by the government.
The implementation of the levy which began in August last year received strong objections from a section of the motoring public who described it as falling in the category of nuisance taxes and hence needed to be reviewed.
But the Minister of Finance, Mr Ken Ofori-Atta, in the presentation of the 2019 Mid-Year Budget Review to Parliament in Accra on Monday, July 29, observed that as a listening government, it was proposing a withdrawal of the levy.
“The government in 2018 introduced the Luxury Vehicles Levy to raise revenue. We have noted suggestions from the general public on the implementation of this tax. Mr Speaker, as a listening government, we are proposing to the House, the withdrawal of the levy,” he said.
Opposition to the levy
The levy, which was announced in the 2018 Mid-Year Budget Review, was hailed by the government as one of the innovative ways to grow domestic revenue.
It was touted as another step towards getting the rich in society, who are seen as patrons of luxury vehicles with high engine capacities, to contribute more to the development of the country.
Its implementation since August 2018 was, however, fraught with challenges, with a number of interest groups staging demonstrations and petitioning against it.
The opposition to the levy reached its peak when former President John Mahama promised to scrap it when the National Democratic Congress (NDC) wins power in the 2020 general election.
In the first eight months of implementation – August 2018 to March 2019 – the levy yielded a paltry GH¢51.45 million, less than half of its budget target for the first three months of this year.
However, Mr Ofori-Atta stated that the government had noted suggestions from the public on the implementation of the levy and had subsequently withdrawn it.
He explained that the withdrawal of the levy and other mid-year revenue measures had been introduced as part of the government’s resolve to ensure that the 2019 budget was implemented as planned.
Explore other innovative sources
He indicated that the government would continue to improve compliance, expand the tax net and explore other innovative sources of raising revenue through other means.
“We are improving domestic revenue generation. The restructuring of the Ghana Revenue Authority (GRA) and the measures we have put in place to automate processes at the ports are already yielding positive results.
“We see a new sense of responsibility from those entrusted with collecting our taxes and we know that they will make this country proud by keeping the tax gates and ensuring that we raise the necessary tax revenues to continue to effectively fund priority programmes for the benefit of all Ghanaians,” he said.
He added that the government was also determined not to spare the rod on those who offended the country’s revenue mobilisation efforts.
Other mid-year revenue measures
On other mid-year measures, the minister noted that revenue measures, including the sale of an electromagnetic spectrum, telcos licences’ renewal, gains to be derived from the realisation of assets and mineral rights, and strengthening of compliance at the ports and others, were being pursued vigorously.
That, he said, was to ensure that the revised domestic revenue target for 2019, which was some GHȼ8.3 million below the original budget projection, was not compromised.