The Finance Committee of Parliament has tabled a request for the waiver of $13.1 million tax and duties for the purchase of vehicles for the official use of Members of Parliament (MPs) and the Council of State from 2021 to 2024.

The waiver will cover import duties, import national health insurance levy (NHIL), import GETFund levy, import value-added tax (VAT), EXIM levy, COVID-19 levy, African Union (AU) levy, inspection fees and withholding tax (IRS tax deposit) on the vehicles.

Report

The request for the tax waiver was contained in a report which was laid by the Chairman of the Finance Committee, Mr Kwaku Kwarteng yesterday.

The report observed that the loans were necessary to provide the framework for the disbursement of funds by the NIB to finance the purchase of vehicles for MPs and Council of State members.

The report said the need for a safe and reliable means of transport for MPs, in particular, in the performance of their functions between Parliament House and their respective constituencies could not be overemphasised.

The report said the committee noted that in respect of the MPs, the agreement required an undertaking by the Parliamentary Service of Ghana to make deductions from the remuneration of the beneficiaries at source and to issue a single cheque to cover the monthly repayments of the loan.

In the case of the members of the Council of State, it said the Ministry of Finance was required to secure an undertaking from each beneficiary to ensure that allowances were channelled through their accounts with the NIB and to mandate the NIB to effect deductions for the purpose of the loan repayment.

“Additionally, the loan agreements require each beneficiary to obtain a comprehensive insurance to cover the vehicles purchased,” the report said.

Numbers

The report said the committee agreed with the Ministry of Finance that the number of vehicles to be purchased by each beneficiary member be capped at two for the purposes of the tax waiver which shall not exceed the cedi equivalent of $43,750 for any member.

“Thus, any member who purchases more than two vehicles will be required to foot the tax bill on the extra vehicles even if the total tax exemption on the first two has not exceeded the tax exemption cap,” it said.

Discontinuation

According to the report, the committee took note of recent concerns expressed by many sections of the public about the burden the current vehicle loan arrangement for MPs and members of the Council of State imposed on the public purse.

“These legitimate concerns are fuelled by the fact that of all the Article 71 officeholders, it is only MPs and Council of State members who benefit from these vehicle loans, part of which are re-paid by the state,” it said.

The report added: “The committee took the view that as representatives of the people, MPs cannot continue to leave these concerns unattended which weakens the confidence Ghanaians have in us and we have a responsibility to reflect the values and ideals of the people we represent”.

Accordingly, the committee strongly recommended to Parliament the discontinuation of the current vehicle loan agreement for MPs and the Council of State members.

“Members of Parliament and the members of the Council of State should have similar duty post vehicle arrangements as other Article 71 officeholders have. And the committee respectfully recommends that Parliament and the Parliamentary Service take the necessary steps to ensure that this happens.

“The instant vehicle loan arrangement for MPs and Council of State members before us today should, therefore, be the last one the state is sponsoring,” it added.

Background

On July 7, 2021, the Deputy Minister of Finance, Mrs Abena Osei-Asare, on behalf of the Minister of Finance, laid a $28 million medium-term loan agreement involving the government, MPs of the Eighth Parliament and the National Investment Bank Limited, to finance the purchase of vehicles for MPs of the current Parliament.

Besides, the Minister for Chieftaincy and Religious Affairs, Mr Ebenezer Kojo Kum, also laid in the House a $3.5 million medium-term agreement among the government, the members of the Council of State and the National Investment Bank (NIB) Limited to finance the purchase of vehicles for members of the Council of State.

The loan agreements and the request for the waiver of taxes were presented to the House on July 13, 2021 and referred to the Finance Committee for consideration and report.