The Institute for Fiscal Studies (IFS) has described the country’s tax exemptions regime which grants waivers to the tune of GH¢4.6 billion as unsustainable; calling on Parliament to pass the Tax Exemptions Bill.
The Finance Ministry has since March 2019 submitted to the legislature a Tax Exemptions Bill for consideration and passage into law to regulate the application of tax and other exemptions, and to provide for related matters.
According to a statement from the IFS, the continuous growth in tax exemptions and reliefs, are not only unsustainable but also deny the country of much-needed revenue.
The policy think-tank said its remarks followed the President’s revelation in his 2019 State of the Nation Address, that tax exemptions in respect of import duty, import VAT, import NHIL and Domestic VAT had grown from GH 392 million (that is 0.6 per cent of GDP) in 2010 to GH 4.66 billion (that is 1.6 per cent of GDP) in 2018.
This trajectory, the IFS said, was dangerous and needs to be corrected with a strengthened bill. Some of the changes the IFS wants made to the bill include a proper and comprehensive definition of what an exemption really is.
The institute also called for an amendment of exemptions relating to privileged persons, free zones enterprises, religious organisations, goods imported by the President, among others.
The amendments if effected according to the IFS, coupled with the swift passage of the bill, will not only help reduce the range and cost of exemptions but increase revenues for the country and strengthen fiscal and macroeconomic stability.