Ghana has joined the scores of nations in the world which have adopted the Value Added Tax (VAT) system, to broaden her tax base.Wednesday, December 30, 98, will mark the re-introduction of VAT which survived for three-and-a-half months only when it was first introduced in 1995. The new tax which has been pegged at 10 per cent to replace the 15 per cent sales and service taxes were passed by Parliament in February under Act 546.

The sales and service taxes have been in operation since the early 60s. The implementation of the VAT will also bring Ghana in line with Economic Community of West African States (ECOWAS) protocol that makes it mandatory for its members to adopt the tax by the end of 1999.Most Countries in the 16-member sub-regional body, especially those in the Francophone zone, have already switched to VAT. However, different internal economic dynamics of member countries are said to be a major reason why other countries are late in implementing the tax. Experts say VAT is more efficient and broad-based.

In 1995, for instance, Ghana's volatile economic factors such as the fast depreciation of the Cedi, high inflation and high prices of goods and services did not favour the introduction of the tax. "While all these factors have been brought under control and we are experiencing a stable economic climate, the elaborate public education will also work to favour the implementation of the tax this time round," an official of the VAT Secretariat said.

The high number of traders who have registered to collect VAT buoys the Secretariat. As at 29 December, 7,376 traders had registered. "Although this is lower than the over 10,000 traders registered in 1995, it is far higher than what we expected to register," the official said. The VAT Secretariat had anticipated that 6,000 traders would register while the International Monetary Fund (IMF) had projected only 2,000.

The good turn-out, could possibly be attributed to the intense public education and expanded business environment.

The threshold, now pegged at 200 million cedis compared with 25 million cedis in 1995 may also explain the shortfall from the 1995 total number of registered traders.

"The threshold has cut off quite a number of traders who had problems in computing VAT which led to increase in prices in 1995," the VAT official said.

Perhaps, this has also helped the VAT Secretariat in its public education to focus on groups on a one-on-one basis, helping them to learn to compute the tax.

However, public reaction on the re-introduction of the VAT has been quiet and people appeared to have adopted a wait-and-see attitude.

"I think there has been enough public education on VAT this time and it will only be well for us to give it a try," Mr. Kwame Agyenim Boateng, a trader in Accra said.

Members of the public think are of the view that VAT at 10 per cent compared with 15 per cent sales and service tax "will not distort prices."

"It is welcoming to reduce taxes by that margin," Boateng said, adding "I believe it will absorb the expected shocks ssociated with the implementation."

A smooth implementation of VAT will be a relief to the government, which has argued that the sales and service taxes, are not wide enough.

Whatever the internal hiccups may be, the implementation will satisfy the requirement of ECOWAS and Ghana will be part of the larger body of nations which have adopted it.