‘Regressive’ VAT increase will widen poverty gap

1 min

A tax analyst, Geoffrey Ocansey has described as regressive, the new tax measures announced by the Finance Minister in the 2023 Budget Statement and Economic Policy.

Speaking on the Citi Breakfast Show Thursday, Mr Ocansey said the increase in VAT by 2.5 percent will widen the poverty gap and heap more pressure on people already overburdened with taxes.

“It is highly regressive, especially when you take the VAT, the increment of 2.5 percent, you have transferred cost from the sellers to consumers, and you have done it on a mass scale,” Mr Ocansey told sit-in host Nathan Quao.

Mr Ocansey added that the “less privileged who are receiving stagnant salaries, those who have lost their jobs, pensioners, they are all on that scale, and they are going to be buying and competing with those who earn taking high salaries. It is so regressive that they are going to widen the poverty gap.”

The Finance Minister last week announced a 2.5 percent increase in VAT when he presented the 2023 Budget and Economic Policy to Parliament.

Mr. Ofori-Atta further indicated that the increase is expected to yield GH¢2.70 billion, which will be used to augment funding for road infrastructure development.

The government also reduced the rate of the Electronic Transaction Levy (e-levy) from 1.5 percent to 1 per cent, but removed the 100 Ghana cedis threshold that was introduced to cushion the vulnerable in society.

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