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…As auto dealers issue one-month ultimatum to government
Emmanuel Yartey
Former Ghanaian president, John Mahama, who is also the National Democratic Congress (NDC) Presidential Candidate for the 2020 General Elections in the country, has promised to abolish the luxury tax on vehicles with bigger engines, if voted into power.
The current administration in the West African country, last August, introduced the vehicles luxury tax to raise more revenue into the coffers if the government.
Consequently, vehicles with engine capacity of 2950 to 3549 cubic centimetres are required to pay GHC1,000 while those with engines between 3,550 to 4049 cubic centimetres pay GHC 1,500. Vehicles with engine capacity above 4049 will pay GHC 2,000.
The tax affects all vehicles, including commercial vehicles, farm tractors, pick – up vehicles,among others. The government expects to rake in at least 300 million Ghanaian cedis from the tax on luxury vehicles by the end of 2019.
However, Mahama, who is also Ghana’s immediate past president, has faulted the policy, saying, ”Not too long ago, the government introduced the luxury vehicles tax. This tax was not well thought through before it was rolled out. They should have exempted all commercial vehicles.
“There are commercial vehicles without the yellow plates, but rather white plates, yet they carry commercial goods. Once they exceed three litres, they are charged this luxury tax. This has brought untold hardship on some of the drivers, especially those who work for the companies and others.”
According to Mahama, “Just recently, I heard that government has only been able to raise GHC 25 million from the luxury tax. If that is the case, then they should abolish it. If they don’t, we, the NDC government, will abolish it when we come into power.”
So far, the government has collected some GHC 21.3 million in taxes from the use of vehicles with engine capacities of 2.9 litres and above between August and December last year which reflected in last year’s provisional fiscal data on public finances.
Appreciating that the taxes are seriously affecting their daily business operations, a coalition of car dealers and owners, in March, staged a massive demonstration against the luxury vehicles tax in Accra, the country’s capital.
Chairman of Vehicle and Asset Dealers Association of Ghana (VADAG) and convener of the demonstration, Eric K. Boateng, said the group wants government to scrap the luxury vehicles tax immediately. They gave a two – week ultimatum to government to act or face their wrath, adding that they were prepared to embark on series of demonstrations across the country if government did not heed to their demand.
Boateng said more than 5,000 luxury vehicles had been parked in various garages across the country because prospective buyers have refused to buy them, all in a bid to avoid the levy.
Chief Director of the Ministry of Finance,Patrick Momo, who received the petition on behalf of the Minister of Finance, Ken Ofori Attah, assured that the petition would be given to the minister for his perusal.
But the stakes are high with regard to the 2020 General Elections, especially with the leader of the largest opposition party, Mahama, promising to abolish the luxury vehicles tax. The move is being perceived by the government as one of many cunning and frightening ways by the NDC to win sympathy votes from the people, prompting government to hurriedly invite heads of the coalition of car dealers and owners last week to the office of the Minister of Finance to begin initiating talks on the matter.
However, there was no consensus at the end of the day. And the association has, as a a result, given government a one – month ultimatum to scrap the levy, otherwise, they would execute its next line of action which it is keeping closely to its chest for now.
