Ken Ofori Atta - Finance Minister
Finance Minister, Ken Ofori-Atta has explained that government’s decision to recalibrate the VAT will have less impact on prices in the long term.
The Finance Minister, during the Mid-Year budget presentation in parliament announced that government has decoupled the 2.5 percent NHIL and 2.5 percent GETFund from VAT, which was initially at 17.5 percent.
Describing the move as a better way of protecting consumers from price hike while increasing revenue, the minister insisted that the policy will also help bring down inflation.
Former Finance Minister, Seth Terkper had already warned that the decision is counterproductive and could see prices go up soon.
But speaking on Citi TV’s current affairs programme, Point of View, Ken Ofori-Atta explained that prices will be stabilized since the increased cost in the recalibration will be shared by the producer, retailer and the consumer.
“Our analysis indicate that the 5% reconstruction will have a much lower burden, sharing between the manufacture and the retailer. Our appreciation is that by the end of the year, we would have knocked off about 2% of inflation,” he said pointing out that this should help government achieve some of its macro-economic targets.
He observed that the decision to recalibrate the VAT will aid government to also generate a substantial amount of domestic revenue to match government expenditure.
He argued that government has undertaken many social intervention programmes such as the Free Senior High School which require funding to sustain such projects.
“So we are seeing a situation that we are able to get some of the money that we require. We will achieve that as I do get about half a billion because the levy runs through everything that you do”
Mr. Ofori-Atta revealed that government’s expenditure over the last 18 months since the Nana Addo government came into power has increased due to Free SHS , cost of utilities as well as other social interventions.
He stated for example that electricity cost, free SHS and other projects have caused government over 5 billion cedis.
This he said calls for a realistic assessment of the situation to sustain these projects.