Former Finance Minister, Seth Terkper, says Value Added Tax (VAT) has been increased through subtle means, contrary to claims by government that there will be no hikes in taxes.
According to him, the business community should not to rejoice yet over what they heard during the 2018 mid-year budget review because the taxes have been increased through other means.
READ ALSO: 2018 Budget Review: Prepare to pay 35% tax if you earn 10k and above
His comments come after Finance Minister Ken Ofori-Atta told Parliament on Thursday that there will be no increase in taxes.
This was after widespread reports in the local media suggested government intended hiking VAT from 17.5% to 21.5%.
However, Mr. Ofori-Atta quashed such reports, saying there is a flat 25% tax rate for all income earning Ghanaians.
He explained that persons who earn GHc10,000 and above should, however, be prepared to pay 35% tax, adding that luxury vehicles will also be taxed.
But Seth Tekper, who served as Finance Minister during the erstwhile John Mahama administration, says government has increased VAT using subtle means.
READ ALSO: 2018 Budget Review: Cedi performing better under Akufo-Addo than under Mahama – Ofori-Atta
According to him, the general public and businesses should not rejoice yet because the move by government “is a VAT increase in disguise”.
In a series of tweets following the presentation of the 2018 mid-year budget review, Mr. Tekper said: “Businesses should not rejoice yet because they cannot claim Input Tax Credit/refunds on 5% of the current 17.5 percent rate. Already, the Flat Rate is denying some registered businesses refunds and Input Tax Credit.
“The measure amounts to a parallel Sales Tax regime that that the VAT replaced. it is a retrogressive step and further mutilation of the VAT regime.
“The removal of Input Tax Credit and Refunds will increase costs and prices. It is not an efficient and business-friendly move,” he added.