Finance Minister Dr. Cassiel Ato Forson has declared Ghana’s VAT system as “distorted” and urgently in need of reform to provide relief to citizens and businesses. Citing the country’s high effective VAT rate and multiple inefficiencies, he stressed the necessity for a comprehensive review in 2025 to ensure a transparent and consultative approach while emphasizing the need to alleviate the tax burden.
Dr. Cassiel Ato Forson, Ghana’s Finance Minister, has identified the nation’s Value Added Tax (VAT) system as “distorted” and stresses the urgent need for reform. During an appearance on Joy News’ PM Express on March 11, following his presentation of the 2025 Budget Statement, he asserted that these reforms are essential to alleviate the financial burden on Ghanaians and enhance business conditions.
He noted that Ghana’s effective VAT rate of approximately 21.9% markedly exceeds that of its African peers, with Morocco being the second highest at around 20%, illustrating a significant issue with the current VAT framework. Dr. Forson stated, “If you look at Africa today, Ghana is the only country with an effective VAT rate of about 21.9%. Clearly, there is a problem with our VAT system.”
Highlighting the inefficiencies of the existing VAT structure, he explained that it entails multiple overlapping layers that create unnecessary complications for both consumers and businesses. “The VAT rate itself has been distorted. There is a cascading element, and you can see the distortion where sales tax has been mixed with Value Added Tax,” he elaborated.
Concerns from experts and industry representatives about the intricacies of Ghana’s VAT system have been longstanding, as these complexities may discourage compliance and impose additional financial hardships on consumers. In light of these criticisms, the government is preparing to consult with stakeholders about potential VAT reforms. Dr. Forson emphasized that these changes are crucial to shaping economic activity, pricing, and tax compliance.
He reiterated that the current VAT structure fails to function efficiently as a consumption tax, which should ideally minimize burdens on businesses and avoid double taxation. In 2025, the government plans to undertake a comprehensive review of the VAT system, with Dr. Forson stating, “This year, we want to spend some good time to engage properly and review the Value Added Tax system.”
These remarks indicate a significant policy shift under Mahama’s administration, which seeks to reduce the tax burden on citizens while improving revenue collection efficiency. The Minister’s commitment to a transparent and consultative approach towards VAT reform is intended to benefit ordinary Ghanaians and facilitate a more equitable tax environment.
In conclusion, Finance Minister Dr. Cassiel Ato Forson has called for urgent reforms to Ghana’s VAT system, arguing its current distortion places an undue burden on consumers and complicates business operations. Addressing the complexities of VAT is essential for enhancing compliance and fostering economic growth. The government’s commitment to a comprehensive review in 2025 signifies a pivotal shift towards a more equitable tax regime, reflecting the administration’s dedication to reducing tax burdens for citizens and businesses while improving overall efficiency.
Original Source: www.myjoyonline.com
