Some tax analysts are cautioning against any attempt to increase the National Health Insurance Levy (NHIL) without proper assessment to determine its impact.
According to them, increase in consumption tax such as the NHIL, if not properly examined, could cause inflationary pressures that may see prices of goods and services up.
The Finance Minister, Ken Ofori-Atta in an earlier interview with the media suggested that one of the taxes that could be reviewed during the mid-year budget presentation is the NHIL due to the cost it puts on government expenditure.
But responding to the suggestion, a tax expert with Ali Nakyea and Associate, William Demitia is appealing to government to look at the cost of increasing the levy before it goes ahead.
He maintained that, there must be a holistic look at the levy before it is increased to protect the poor.
“My problem has always been that, we want to increase revenue but at what cost? Remember that, if the item suffers an additional of increase in tax, the cost of the item becomes expensive. That may have inflationary surge, where people may be spending money on very fewer goods,” he argued.
He warned that “it is very important that before we increase the rate of consumption base taxation, we take a critical analysis of its effect on the general economy, and also its effect on those who are poor”.
Recommending more pragmatic measures, Mr. Demitia observed that government and the Finance Ministry must rather look at existing tax policies which are not being implemented.
Implementing such tax policies, according to him, will help government improve revenue mobilization as the informal sector is brought into the tax net.
“That is what to me we need to do to be able to assess the increase in consumption tax before we take a step. To me, there are other ways that we can look at it in raising revenue. That is what we haven’t explored, the informal sector, we have not gone ahead and enforced the law as to how they are taxed”.
Mr. Demitia stated that government’s attempt to enforce the tax laws will yield good results due to Finance Ministry’s commitment to remove nuisance taxes.