IEA kicks against tax increment; wants free SHS reviewed

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The Institute of Economic Affairs (IEA) has rejected tax increments announced by Finance Minister Ken Ofori-Atta in his mid-year review and supplementary Budget presentation.

Addressing the media today [Tuesday], Director of research for the IEA Dr. John Kwakye noted that government could used other innovative means to generate more revenue instead of the increment5 in taxes.

“It has to be said that the decision to increase the taxes, we think it is unfortunate, given the additional burden the increases will pose on already overburdened tax payers. Rather than increasing the taxes, we were expecting the minister to introduce new initiatives to raise revenue.”

The Institute also underscored the need for government to review the implementation of the free senior high school policy saying: “…In its current form, the free senior high school is a very costly one, the number of students involved that likely to mount with additional future streams will compound the cost. It is also very costly for government to offer a whole range of free things under the policy including the fees, other academic charges, books, food, accommodation and uniforms. The mounting free SHS cost will put immense burden on the budget to other equally important projects.

“It will be worthwhile to consider options…first a kind of means testing scheme could be introduced to make financially capable parents pay for their wards…second a government-parent cost sharing arrangement could be arranged where government pays for say academic fees, and charges, books and boarding while parents pay for feeding and uniform…third, consideration should be given to the idea of say three students per family.”

Presenting the mid-year budget review in parliament few weeks ago, the Finance Minister, Ken Ofori-Atta announced increment in talk tax and the energy sector levies.

“Government proposes to increase the Energy Sector Levies by GHp 20 per litre for petrol and diesel and GHp 8 per kg for LPG, so as to increase the inflows to enable Government issue additional bonds to pay down our energy sector debt obligations. Based on current indicative prices for petrol and diesel this translates to GHp 90 per gallon,” he said.

He further indicated that the communication service tax should be increased the tax to 9% to develop the foundation for the creation of a viable technology ecosystem in the country.

“This will comprise amongst others putting in systems to identify and combat cybercrime, protect users of information technology and combat money laundering and other financial crimes,” he announced.

By: Rashid Obodai Provencal

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