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27.06.2019 Business & Finance

Vehicle And Asset Dealers Threaten Mammoth Demo Over Luxury Tax

Vehicle And Asset Dealers Threaten Mammoth Demo Over Luxury Tax
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Vehicle and Asset Dealers Association of Ghana (VADAG) have vowed to hit the streets on July 9 if the Akufo-Addo government refused to scrap the luxury vehicle tax.

The association laments that businesses of its members have been gradually collapsing since the introduction of the luxury vehicle tax.

Addressing the press, General Secretary for the group, Clifford Ansu said the flawed categorization of luxury vehicles has discouraged many people from purchasing their vehicles, causing them to lose huge sums of money.

“We intend to demonstrate on July 9, 2109, because the government has kept quiet on the issue of scraping luxury vehicle tax, which is killing our business. We don't want the tax to exist, because a lot of cars imported before the luxury vehicle tax bracket are not being patronized by people,” he said.

In May 2019, a tax analyst, Leonard Shang-Quartey said that the government's newly introduced luxury vehicle tax is fraught with “serious challenges” that need to be checked.

He argued that to the extent that the proceeds collected from the tax will go to service debts, will be a challenge for those affected to accept it and pay willingly.

Speaking on the Tax Dialogue Series on the Citi Breakfast Show on Thursday, Mr. Shang-Quartey who is the Coordinator of the Tax Justice Coalition said although the tax appears to be progressive, it does not ultimately benefit those who pay.

“If you look at the luxury vehicle tax, on the surface, you will think it is a progressive tax or a redistributive tax. The point is about taxing those who can afford those high capacity vehicles and if you are taxing them it means that you can use those proceeds to support other services. But if you put it into context, you will realize that it has several challenges and several problems with it because what is even the motivation behind this tax?” he quizzed.

About the luxury vehicle tax

The luxury vehicle tax was introduced during the 2018 midyear budget review by the Finance Minister, Ken Ofori Atta.

It affects vehicles with engine capacity above 3.0 litres, attracting an annual charge of between GHc1,000 to Ghc2,000.

Seven Associations including the Vehicle and Asset Dealers Association in March 2019 embarked on a demonstration to protest the luxury vehicle levy.

Members of the associations presented a petition to the Ministry of Finance expressing their misgivings over the tax.

They said the tax was going to lead to the collapse of their business as more people were now unwilling to buy their vehicles of engine capacity of at least 3.0

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