Ghana secures $4.1 million from the recent vehicle luxury tax introduced in the country

The taxes were collected from individuals who use vehicles with engine capacities of 2.9 litres and above between. The money was taken from August and December last year, a provisional fiscal data on public finances for last year has shown.

The collected amount was below the $20 million (GH¢104 million) that was projected to be collected within the period.

The implementation of the vehicle luxury tax begun in August 2018 as a new policy to help raise more revenue for the government.

A Fiscal Policy Specialist at Oxfam Ghana, Dr Alex Ampaabeng, in an interview said that the revenue collected, although is very low compared to the government's projection, offers a foundation for future decisions and most importantly, a basis for national conversation around this tax.

“It is a strong untapped revenue potential that must be pursued but must be well administered,” he said.

Despite Dr Ampaabeng’s projections, he thinks the government did not provide enough time and appropriate education before the introduction of this levy.

“Tax knowledge greatly influences tax compliance and the government did very little to improve people’s knowledge about this levy.

He further added that “A poor understanding of a particular tax is also likely to have broader implications as uninformed taxpayers may be more prone to seeing the new tax as unjust and might misperceive the benefits of paying it.”

He, therefore, urged the government to do its best to educate the public more on the tax so that it will be able to receive more revenue from the tax.

About the vehicle luxury tax

The vehicle luxury tax was introduced by the government in August 2018 as a new policy to help raise more revenue.

Vehicles with engine capacity of 2950 to 3549 Cubic Centimetres are required to pay $193.78 (GH¢1,000) while those with engines between 3,550 to 4049 cubic centimetres pay $290.68 (GH¢1,500).

Vehicles with engine capacities above 4049cc are to pay $387.57 (GH¢2,000).

The tax also affects vehicles of the listed capacities existing prior to the passage of the law.

Exempted from the levy are; tractors, ambulances, commercial vehicles that have the capacity to transport more than 10 persons and commercial vehicles for the transport of goods.