Reintroduce luxury vehicle tax – SEND Ghana to gov’t

SEND Ghana has called for the reintroduction of the luxury vehicle tax to mobilize domestic revenue to implement programmes.

The CSO said the government failed to generate consensus for the policy because its target was wrong.

It said the government failed to use the brand of cars to categorize the levy.

The Country Director for SEND Ghana, George Osei Bimpeh said the government should be bold about reintroducing the luxury tax.

“We are saying that government should be bold because progressivity in tax regime requires that those people who have more pay more. And that is what we are asking for. And we are encouraging the government to bring it back,” he said as part of the CSO’s recommendations after a preliminary assessment of the 2021  budget

According to him, the government had defined luxury cars by the engine capacity, a situation he described as wrong.

He explained that there were a lot of luxury cars that do not even have that high capacity.

“You and I know that a car like Range Rover, Mercedes Benz, Bentley, Ferrari is known to be luxury in nature and so we think that we can use the brand for example rather than the engine capacity to do the classification.”

“And you realise that the economic elite were the ones who were more or less vociferous against it. These people of course because they have the social capital to negotiate and to put pressure on the government. Often times government feels threatened,” Mr. Osei Bimpeh said.

He stated that on the other hand there are a lot of other utility cars that poor people patronize that are used for public transport and have higher capacity. “Some are also used for agricultural purposes. So, it was completely wrong.”

“But that of course will require the government to engage other stakeholders like those at Abossey Okai to clarify the classification issues so that when it comes, it will actually target the rich rather than making it too broad that will result in a whole lot of agitation.”

SEND GHANA was established on August 4, 1998, with the maiden name Social Enterprise Development Foundation of West Africa.

Luxury vehicle and withdrawal 

The Luxury Vehicle Tax was introduced in August 2018 to levy vehicles with big engine capacities.

Vehicles with capacities between 3.0 and 3.5 litres were to pay an annual tax of GH¢1,000; those with capacities of 3.6 to 4.0 litres were also to pay GH¢1,500 and those with 4.1 litres and above pay GH¢2,000.

According to the government, the introduction was in line with the Sustainable Development Goals (SDGs) to control emissions and reduce their impact on climate change.

But the initiative did not sit well with a section of the public, especially car dealers and some owners who staged a demonstration against the policy.

The protests forced the government to withdraw the policy in July 2019.

Announcing the withdrawal of the tax during his presentation of the 2019 mid-year budget review in parliament, the Minister for Finance, Ken Ofori-Atta said “We have noted suggestions from the general public on the implementation of this tax. As a listening government, we are proposing to the House the withdrawal of the levy”.