The government has collected some GH¢21.3 million in taxes from the use of vehicles with engine capacities of 2.9 litres and above between August and December last year, provisional fiscal data on public finances for last year has showed.
The amount is GH¢82.7 million or 79.52 per cent below the GH¢104million that was projected to be collected within the period. The projections were contained in the 2018 mid-year budget review.
The implementation of the vehicle luxury tax begun in August 2018 as a new policy to help raise more revenue.
A Fiscal Policy Specialist at Oxfam Ghana, Dr Alex Ampaabeng, in an interview on April 9 in Accra observed that the development brought to the fore the country’s inability to undertake proper consultation before a new system or initiative was introduced.
“The revenue collected, although is very low compared to government’s projection, offers a foundation for future decisions and most importantly, a basis for national conversation around this tax.
“It is a strong untapped revenue potential that must be pursued but must be well administered,” he said.
According to him, the government was overly ambitious about its targets, especially considering the fact that this was a new levy.
“I do wonder though if the government based its projections on accurate records of taxable vehicles in the country.
If this is indeed the case, then it is very surprising that it had almost 80 per cent shortfall.”
The fiscal policy specialist indicated that the government did not provide enough time and appropriate education before the introduction of this levy.
“Tax knowledge greatly influences tax compliance and the government did very little to improve people’s knowledge about this levy.
“A poor understanding of a particular tax is also likely to have broader implications as uninformed taxpayers may be more prone to seeing the new tax as unjust and might misperceive the benefits of paying it,” he added.
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