Tax consultant, Abdallah Ali-Nakyea believes Government needs to take a second look at the Luxury Vehicle Levy which has been a source of agitation among sellers of vehicles which fall in the category.
Describing the levy as a nuisance tax, Mr. Ali-Nakyea submitted the levy is likely not to bring in the anticipated revenue while distorting the market.
According to the fellow of the Chartered Institute of Taxation Ghana; reasons why taxes are imposed range from preventing people from consuming harmful products to containing inflationary activities noting however that the Luxury Vehicle Levy is both contested by both sellers and buyers.
“One cannot drive a Hyundai Atos or a Daewoo Tico to Kumasi given the distance and the terrible nature of our roads. So if a traveller opts to use a high engine capacity vehicle, it isn’t borne out of luxury but of necessity and mustn’t be charged an extra tax for that,” he declared.
Further adding: “Even if they are being charged the levy for fuel emission or wear and tear on the road due to frequent use, the Special Petroleum Levy already takes care of any such consideration. If it’s about containing the age of the vehicles imported, at the import point, the age of vehicles imported is already considered as part of the duty charged and if it’s about engine capacity, that is also factored in the valuation of the vehicle and accompanying duties and charges demanded at the ports as well as the road worthy levies paid at the Driver and Vehicle Licensing Authority (DVLA).”
Mr. Ali-Nakyea also held that using a salon car on a pothole-riddled road will mean frequent visits to the fitting shop while opting for a 4×4 ride to ply the road will be a safer economic decision not requiring the state to penalize such people.
Car Owners and Dealers Association have called for the scrapping of the levy with its president; Eric Boateng noting after protest marches and petitions sent to Finance Ministry, Parliament and the Jubilee House, the Finance Ministry has availed itself to meet with the car dealers to appreciate their concerns.
Ghana’s former president; John Mahama who is also the presidential candidate of the National Democratic Congress (NDC), has served notice his administration will scrap the luxury vehicle tax when it comes to power describing the levy as an ill-conceived one overburdening commercial drivers.
Ghana’s parliament passed the Luxury Vehicle Levy imposing an annual levy on vehicles with high engine capacities from August 1, 2018.
Vehicles with engine capacity 2,950 cubic centimeters and above are required to pay respective levies from Ghc1000.00 to GHc2000.00 with the DVLA authorised to collect the levy on behalf of Government.
By Michael Eli Dokosi/goldstreetbusiness.com