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Ghana’s Parliament approves removal of Luxury Vehicles Tax

Ghana’s Parliament approves removal of Luxury Vehicles Tax
Ghana’s Parliament approves removal of Luxury Vehicles Tax

Ghanaʼs Parliament has passed the Luxury Vehicle Levy (Repeal) Bill, to scrap the taxes on luxury vehicles introduced by the government in 2018. This Bill gives effect to one of the policy measures announced in the Mid-year review by Finance Minister, Ken Ofori-Atta on Monday.

The levy was introduced during the 2018 mid-year budget review, which took effect in August 2018 despite opposition from various groups. The tax which mandated owners of luxury vehicles with engine capacities of 3 litres or more, to pay an annual tax on their vehicles.

Vehicles with engine capacities of 3.0 – 3.5 litres were to pay an annual tax of GH¢1,000.00; those with engine capacities of 3.6 – 4.0 litres will pay GH¢1,500.00 annually and 4.1 litres and above are to pay an annual tax of GH¢2000.00. However, the implementation was greeted with a series of protests by owners and dealers in vehicles with engine capacity of 3.0 and beyond with a call on the Ghana government to rethink the tax.

Earlier this week, Mr Ofori-Atta told Parliament, the government had “noted suggestions from the general public on the implementation of this tax” and proposed its withdrawal only a year after implementation.

Earlier this month, the Minority in Parliament demanded the removal of the luxury vehicle tax which it deems as “economically inefficient.” Government had projected a GH¢136.53 million revenue from the tax, but revenue collected in the first quarter of 2019 yielded only GH¢30.19 million.

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