IEA, IMANI spat over 1% VAT for free SHS funding

The respected Institute of Economic Affairs (IEA) has suggested to government to increase the VAT rate by 1 percent to cater for the funding of the free SHS.

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The respected Institute of Economic Affairs (IEA) has suggested to government to increase the VAT rate by 1 percent to cater for the funding of the free SHS.

A Senior Research Fellow at the IEA, Dr Eric Osei-Assibey, in analysing the mid-year budget presentation by the Finance Minister Thursday said the Free SHS policy is a catalyst for sustainable growth and development, adding that the programme needs an exclusive funding.

“Just as we did for 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,”  he said.

But for IMANI, increasing the VAT rate will run counter to the governing New Patriotic Party’s commitment not to increase taxes.

IMANI founding president Franklin Cudjoe said in an interview with Accra-based Citi FM that he believes the government has funds to make sure the free SHS programme succeed.

“I suspect they already have funds to make sure the plan succeeds," he said.

"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.

Last month, the Minister of Education said the implementation of the policy to provide free public senior high school (SHS) education will begin from the 2017/2018 academic year.

Dr Matthew Opoku Prempeh said students who fail their Basic Certificate Education Examination (BECE) will not enjoy the Free Senior High School (SHS) policy being implemented by the government.

He noted that a student who is repeated as a result of failing an exam or for any other reason, will also not enjoy the policy but only students who pass their BECE

He also said qualified students must also be placed under the Computerised School Selection Placement System (CSSPS).

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