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How VAT was withdrawn from Parliament

The Nana Addo Dankwa Akufo-Addo led government is hell-bent on passing the Electronic Transaction Levy, E-levy, which is to impose a 1.75% tax on all electronic transactions.

Since the announcement of the introduction of the E-levy during the 2022 budget presentation by Ken Ofori-Atta, the finance minister, on November 17, 2021, it has received strong public backlash from some Ghanaians especially Members of Parliament from the Minority Caucus.

Ofori-Atta during the budget presentation indicated that, this new directive forms part of strategies to widen the country’s tax net.

He added that the 1.75% tax is also to enhance financial inclusion and protect the vulnerable in the country.

Ghanaians’ opposition to the introduction of taxes by the government is not new to the country especially during the Fourth Republic.

Under the Jerry John Rawlings (of blessed memory) administration between 1993 to 2000, the then-President had largely one-sided NDC Parliament – this is because the NPP had boycotted the 1992 Parliamentary election – and wanted to introduce the new Value Added Tax (VAT).

Ghanaians were not happy about the announcement, there were series of agitations from the then-opposition which led to the ‘kume preko’ demonstration led by the current President, Nana Addo Dankwa Akufo-Addo, Dr. Charles Wereko Brobbey, Dr. Nyaho Nyaho Tamakloe, Abdul Malik Kweku Baako, Kwesi Pratt Jnr, Lawyer Akoto Ampaw, Victor Newman, Kwaku Opoku, Napoleon Abdulai and Stanley Agyiri Blankson.

The ‘kume preko’ demonstration was said to have been one of the biggest protests ever organised in the country, with an estimated 100,000 people participating.

The Rawlings administration due to various agitations from Ghanaians against VAT, had to withdraw the bill from Parliament and assured Ghanaians in his sessional address that his government “has no intention of trying to sneak a disguised VAT past our people.”

Sharing portions of President Rawlings’ sessional address which led to the withdrawal of the VAT on his Facebook timeline, Samuel Okudzeto Ablakwa, NDC MP, North Tongu, wrote:

“The stark irony is that the man who led the agitations then, and questioned President Rawlings’ democratic credentials is President now and contemptuously refuses to listen to the people — indeed, President Akufo-Addo said only this week that he will ensure the killer E-Levy is passed at all cost.

How VAT was withdrawn from Parliament by President Rawlings

“Power simply amplifies who we really are; history settles the scores.”

In the sessional address sighted by GhanaWeb, President Rawlings stated that, the reactions to the VAT was one major fact which upsets the government’s budgetary calculations for 1995.

Amidst the usual cheer of ‘hear hear’ from the MPs, President Rawlings said, “there can be no doubt that the VAT tax system offers the most simple, fair and effective way of collecting revenue. However, in our case, major weaknesses soon showed in the planning and implementation of the VAT programme, especially in the area of public education.

“The government, therefore, withdrew the tax in response to perceived concerns. But we have paid a very heavy price for this. Anticipated revenue fell short of expectation, limiting the government’s ability to absorb the demands of its employees.”

President Rawlings continued: “Mr. Speaker, let me, however, assure the nation that this government has no intention of trying to sneak a disguised VAT past our people. We will ensure that the average Ghanaian has had a better understanding of the advantages of the system before we revive it.

“And there is no doubt in our minds that the minute they understand it, and that educational effort is being complemented by the law enforcement agencies, this tax system will bring us what is required; what we have projected.”

Source: www.ghanaweb.com