04 August 2017

1% VAT funding for Free SHS ‘misplaced’ – IMANI

Policy think tank, IMANI Africa has described as misplaced, a suggestion by the Institute of Economic Affair (IEA) for the government to increase the 17.5 percent VAT by 1 percent to fund the Free SHS program.

It said any increase in VAT will put undue pressure on Ghanaians.

Many have given their suggestions as to how government can raise funds to pay for its flagship educational policy, Free SHS which government has budgeted some GH¢400 million for.

A Senior Adjunct Research Fellow of the IEA, Dr. Eric Osei-Assibey, at a post mid-year budget press conference, said “just as we did for the NHIS, increasing the VAT rate by say 1% and ring-fencing it for exclusive funding of the Free SHS will be very ideal. Domestic tax revenue provides a more stable and predictable source of financing expenditure for important public programmes such as free education.”

But the president of IMANI Africa, Franklin Cudjoe in an interview with Citi News said, he believed the government had alternative sources of raising money to fund the program other than increasing VAT.

He expressed shock at why the Dr. Osei-Assibey would make the suggestions despite indications that the government was committed to reducing taxes which it believes have been a burden on the citizenry.

“I suspect they already have funds to make sure the plan succeeds. I’m not sure taxation is one of them. For a government that is interested in reducing taxes, I would think that it may not be fair on them to be asked again to impose an additional 1% tax for something they already had a master plan for and ways to find sustainable resources to execute,” Franklin Cudjoe said.

Debate over source of funding

A debate over the source of funding for the Free SHS program became rife when the Senior Minister, Yaw Osarfo Maafo said in a Citi News interview that the government would use money from the Heritage Fund to foot the bill.

His position was challenged by many people who said the Heritage fund was meant to be reserved for the use by future generations.

The Finance Minister, Ken Ofori-Atta subsequently announced that contrary to Mr. Osafo Maafo’s claims, the program will be funded with the Annual Budget Funding Amount (ABFA).

He said it will cost government GH¢400 million to implement the free SHS programme for just the 2017/2018 academic year.



By: Jonas Nyabor/citifmonline.com/Ghana

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