The director of the Institute of Statistical, Social, and Economic Research (ISSER), Prof. Peter Quartey, has indicted that the increase in the value-added tax (VAT) rate would result in inflation in the first quarter of 2023.
Speaking at the 2023 Budget Statement Review at the University of Ghana campus on December 6, 2022, Prof. Peter Quartey stated that the new VAT rate would affect the prices of consumer goods thus causing inflation next year.
The increase in the VAT would affect consumer goods, prices of consumer goods. Though the Bank of Ghana mentioned recently that inflation would go up as a result of the VAT they would introduce in 2023 so for the first quarter of 2023, we might see inflation increasing in response to the increase in VAT.
Finance Minister Hon. Ken Ofori Atta during his presentation of the budget announced a 2.5% increase in VAT, and the reduction of the E-Levy Act headline rate from 1.5% to one percent (1%) of the transaction value; the removal of the daily threshold.
Prof. Peter Quartey further opined that the E-levy should be kept at 0.5% in order to raise the necessary revenue.
He said that the current projections of revenue to be generated by the government through the E levy are overly ambitious and unrealistic to achieve.
The momo E-Levy the electronic transaction tax including the threshold could have been maintained and the rate at 0.5% or close to that so that we are able to raise the need revenue. Our over ambitious needed growth projections of 326.7% in 2023 is not realistic because people always find substitutes.
Story by Kuuku Osei- Baidoo | univers.ug.edu.gh