Ghana secures $5.6 million from the luxury vehicle tax in the first quarter of 2019

The Ghanaian government has collected some $5.6 million (GH¢30.19 million) from people who use luxury vehicles in the country within the first quarter of this year.

The taxes were collected from individuals who use vehicles with engine capacities of 2.9 litres and above.

According to a provisional fiscal data from the Ministry of Finance the revenue raised is against a target of GH¢136.53 million.

The data released on June 17 indicated that a revenue shortfall of GH¢106.34 million which represents 77.89% decline was recorded.

The development according to the ministry threatens the government’s annual revenue target of GH¢598.13 million from the levy.

Further analysis of the data on public finance showed that there was a revenue shortfall for every month since January.

This has sparked concerns as to the kind of background checks undertaken before the levy was introduced.

In February this year, six groups staged a demonstration against the luxury vehicle tax in Accra.

A tax expert, Mr Abdallah Ali-Nakyea who spoke on the trend said that this offered a basis for the repeal of the levy in the next budget.

This, he said, was necessary because people were now avoiding vehicles with engine capacities of 2.9 litres and above. He, therefore, said the levy must be put in the category of nuisance tax.

“The levy falls on the category of nuisance tax because the government could not even collect 30 percent of the revenue projected to be collected over the period,” he said.

About the luxury vehicle tax

The luxury vehicle tax was introduced by the government in August 2018 as a new policy to help raise more revenue.

Vehicles with engine capacity of 2950 to 3549 Cubic Centimetres are required to pay $193.78 (GH¢1,000) while those with engines between 3,550 to 4049 cubic centimetres pay $290.68 (GH¢1,500).

Vehicles with engine capacities above 4049cc are to pay $387.57 (GH¢2,000).

The tax also affects vehicles of the listed capacities existing prior to the passage of the law.

Exempted from the levy are tractors, ambulances, commercial vehicles that have the capacity to transport more than 10 persons and commercial vehicles for the transport of goods.

Berlinda Entsie

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