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Tax Cuts Aviation Minister says 17.5% tax cut increased domestic air travel

The Aviation Minister, Cecilia Dapaah, said that the numbers increased from some 290,000 to over 320,000 passengers.

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The Aviation Minister, Cecilia Dapaah, has said that domestic air travel has increased by 9.64 percent after the removal of 17.5 percent VAT on domestic airfares.

She told the Members of Parliament that the numbers increased from some 290,000 to over 320,000 passengers.

Cecilia Dapaah was briefing Parliament on Tuesday (June 26, 2018).

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The Finance Minister, Ken Ofori Atta announced the government’s decision to scrap the VAT on domestic air travel when he presented the budget in 2017.

The Aviation Minister said this decision by the government has been beneficial.

“…The government pledged and abolished the 17.5% value-added tax on domestic airfares as an incentive to domestic airlines. The removal of the 17.5% VAT not only led to a reduction in domestic airfares but also led to an increase in the number of passengers. For instance, domestic passenger trips from May to December 2017 were 323,754 as against 295,278 passengers for the same period in 2016 representing an increase of 9.64%,” she said.

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The Minister further told Parliament that competition in the domestic airspace is expected to increase as new entrants are to expected to join the industry.

“It is our expectation that with new entrants in the pipeline, the domestic airfares would come down. The Ministry continues to engage other operators such as Starbow to ensure the resumption of operation. To this end, local businesses and prospective investors such as Baby Jet airlines among others have advanced plans to commence domestic airline operations,” she added.

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