Urgent Reforms Needed for Ghana’s Distorted VAT System, Says Finance Minister
Finance Minister Dr. Ato Forson has declared Ghana’s VAT system as distorted and in need of urgent reform to relieve citizens and businesses. He highlighted the inefficiencies within the current structure and the implications of the nation’s high VAT rate. A comprehensive review of the VAT system is planned for 2025, aiming to foster compliance and economic growth.
Finance Minister Dr. Cassiel Ato Forson has characterized Ghana’s Value Added Tax (VAT) system as “distorted” and indicated that urgent reforms are necessary to alleviate the financial stress on everyday Ghanaians and businesses. During his appearance on Joy News’ PM Express, following the presentation of the 2025 Budget Statement, he emphasized that refining the VAT is vital to remedying the tax inefficiencies that currently exist in the system.
Dr. Forson noted that Ghana has the highest effective VAT rate in Africa at approximately 21.9%, compared to Morocco’s 20%. He expressed concern over the complexity and inefficiencies within the current VAT structure, which he claimed complicate compliance for businesses and impose substantial burdens on consumers. “The VAT rate itself has been distorted… there are inconsistencies that need to be addressed,” he elaborated.
There has been long-standing discontent among experts and industry stakeholders regarding Ghana’s VAT framework, which they assert deters compliance and exerts an unwarranted financial burden on the populace. As the government prepares to consult with stakeholders on proposed VAT revisions, the implications of these reforms on pricing, economic activity, and tax compliance are under scrutiny.
Dr. Forson warned that the present form of VAT fails to function efficiently as a consumption tax and should be revised to alleviate pressures on businesses and prevent the occurrence of double taxation. He expressed the government’s dedication to a comprehensive review of the VAT system in 2025, stating, “This year, we want to spend some good time to engage properly and review the Value Added Tax system.”
The Finance Minister’s comments indicate a notable policy shift by the Mahama administration, which has consistently expressed its intention to lighten the tax burden on both individuals and businesses while improving revenue collection effectiveness. This approach signals a commitment to fostering economic growth through a more streamlined VAT system.
In conclusion, the Finance Minister’s identification of Ghana’s VAT system as distorted underscores the necessity for significant reforms aimed at reducing the tax burden on citizens and businesses. The anticipated comprehensive review in 2025 is a commitment to addressing the inefficiencies and complexities currently present, with the goal of enhancing compliance and promoting economic growth. As stakeholders prepare for these changes, the government’s transparent engagement will be crucial in shaping an effective VAT framework.
Original Source: www.myjoyonline.com
