This bill was passed despite strong opposition by Minority side of the house. They argued that the passage of the bill will not benefit spare parts dealers in the country.
The Deputy Minority Leader, James Avedzi told Accra-based Citi FM that they are in doubt the bill will yield the required results since no strategy has been put in place to ensure prices of spare parts also reduce to reflect the tax removal.
“The targeted beneficiary who are actually the consumers will eventually not benefit…The Minority is not against it. It is only saying that there must be a mechanism to ensure that the effect is felt by the consumer. The mechanism to ensure that if you go to the market, the importer pays less duty or no duty on the parts at the ports. The mechanism must be put in place to ensure that the price of spare parts reflect that reduction.”
The Minister of Finance, Ken Ofori Atta announced the scrapping and revision of some taxes as promised by the New Patriotic Party (NPP) during its campaign ahead of the 2016 elections.
He explained that although some of those taxes were introduced by the erstwhile National Democratic Congress (NDC) government to increase revenue, they had become an unprofitable means of raising money and also a burden to the private sector, stifling their development.
Parliament subsequently approved four amendment Bills to scrap taxes as proposed in the 2017 budget.
The Bills were the Income Tax (Amendment) Bill, Special Petroleum Tax (Amendment) Bill, Special Import (Amendment) Bill and Customs and Excise (Petroleum Taxes and the Petroleum Related Levies (Repeal) Bill.
Below is the list of taxes that have been abolished and reviewed by the government
Abolished taxes
- 1 percent Special Import Levy;
- 17.5 percent VAT/NHIL on financial services;
- 17.5 percent VAT/NHIL on selected imported medicines, that are not produced locally;
- Initiate steps to remove import duties on raw materials and machinery for production within the context of the ECOWAS Common External Tariff (CET) Protocol;
- 17.5 percent VAT/NHIL on domestic airline tickets;
- 5 percent VAT/NHIL on Real Estate sales;
- Excise duty on petroleum; – Special petroleum tax rate from 17.5 percent to 15 percent;
- Duty on the importation of spare parts; – Levies imposed on kayayei by local authorities;
- Taxation, the gains from realisation of securities listed on the Ghana Stock Exchange or publicly held securities approved by the Securities and Exchange Commission (SEC);
Reviewed taxes
- Reduce National Electrification Scheme Levy from 5 percent to 3 percent;
- Reduce Public Lighting Levy from 5 percent to 2 percent;
- Replace the 17.5 VAT/NHIL rate with a flat rate of 3 percent for traders;
- Implement tax credits and other incentives for businesses that hire young graduates.