Revenue collected from the use of vehicles with engine capacities of 2.9 litres and above yielded only GH¢30.19 million in the first quarter of this year.
This is against a target of GH¢136.53 million, a shortfall of GH¢106.34 million which represents 77.89 per cent decline, according to a provisional fiscal data from the Ministry of Finance released on June 17.
The development is likely to threaten the government’s annual revenue target of GH¢598.13 million from the levy.
Further analysis of the data on public finance indicated that there was a revenue shortfall for every month since January.
This has sparked concerns as to the kind of background checks undertaken before the levy was introduced.
For instance, in February this year, six groups staged a demonstration against the luxury vehicle tax in Accra.
They drove their vehicles in a convoy through some principal streets, protesting the levy which was introduced by the government in August 2018.
In an interview with the GRAPHIC BUSINESS on June 18 in Accra, a tax expert and Managing Partner of Ali-Nakyea and Associate, Mr Abdallah Ali-Nakyea, stated that the trend offered a basis for the repeal of the levy in the next budget.
This, he said, was necessary because people were now avoiding vehicles with engine capacities of 2.9 litres and above and completely put the levy in the category of nuisance tax.
“The levy falls on the category of nuisance tax because the government could not even collect 30 per cent of the revenue projected to be collected over the periotd,” he said.
Given that renewal of vehicle licences often falls between January and February, he added that the government could not meet its GH¢598.13 million revenue target.
Background
The vehicle luxury levy was introduced by the government in August 2018 as a new policy to help raise more revenue.
Vehicles with engine capacity of 2950 to 3549 cubic centimetres are required to pay GH¢1,000, while those with engines between 3,550 to 4049 cubic centimetres pay GH¢1,500.
Vehicles with engine capacities above 4049cc are to pay GH¢2,000. The tax also affects vehicles of the listed capacities existing prior to the passage of the law.
Exempted from the levy are: tractors, ambulances, commercial vehicles that have the capacity to transport more than 10 persons and commercial vehicles for the transport of goods.
Other exemptions as may be prescribed by the minister responsible for finance.
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