Increasing VAT rate was a lazy approach to burden faithful few – Bokpin

Economist, Professor Godfred Bokpin says the government chose the ‘lazy man approach’ by increasing the Value Added Tax (VAT) rate.
According to the lecturer, the 2.5 per cent increment will only burden the few citizens who have in the past paid the levy.

Prof Bokpin believes that government should have instead reviewed the implementation of the tax policy to ensure that more citizens paid the tax.
This move, he explained, will assist government to “generate much revenue from VAT without increasing the rate.”

“If you look at our revenue generation from VAT it is not that the rate hasn’t been high, it is about inefficiency. If you look at the same tax handle in other countries, they are doing about 60% and we are doing 44% so this shows that there is some inefficiency somewhere.

“So we need to focus on compliance and efficiency underpinned by administrative reforms and deployment of digitisation. But we decided to go for the lazy man approach of just increasing the rate to burden the faithful few,” he said on Wednesday.
Finance Minister Ken Ofori-Atta announced government’s decision to increase VAT when he presented the 2023 budget on November 24.

Ken Ofori-Atta said the review is to directly support road construction projects and the digitisation agenda.

However, speaking on Joy FM’s Super Morning Show, Mr Bokpin insisted that high taxation will fuel inequality in the country.

“Even though everybody will be paying, it will affect the poor compared to the rich. So apart from the fact that it will affect growth, you won’t also do that if your goal is to promote inclusivity and greater social progression.”

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