An Economist, Professor Godfred Bokpin has hit back at the government for seeking to grant ¢12 billion tax exemptions for companies under the One District One Factory (ID1F) programme.

Speaking in an interview on Joy FM’s Top Story on Wednesday, he said “There is a considerable level of abuse in the name 1D1F. Political abuse.”

According to him, “government is taking advantage of political intervention to milk the system.”

“The point is that if it is that good why not rather close the gap and deploy that revenue efficiently creating a general macro-economic environment that is conducive for businesses whether they are under 1D1F or not.”

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His comment follows the Minority in Parliament's claim that the Finance Ministry is seeking more than 7 billion cedis in fresh tax exemption requests despite another 5.5 billion cedis in exemption requests pending.

This 12 billion cedis in tax exemption requests are all before the Finance Committee of Parliament with the Minority blocking the approval of the initial 5.5 billion cedis.

But the Trades Minister in defense of the tax exemptions said they are expected to bolster the government's One District One Factory programme.

Professor Bokpin, on the other hand, says Ghana loses over 5 percent of its Gross Domestic Product annually due to tax exemptions.

This he says is the reason the International Monetary Fund has identified tax exemptions as one of the key issues to be resolved for the country to preserve its revenue base.

“If you look at the 2019 State of the Nation Address, our own president told us what exemption is doing to our revenue base and that by 2018, Ghana lost more than 4.66 billion cedis through one aspect of exemption alone,” he added.

He noted that although there is some conventional wisdom in giving out exemptions, “we are not doing it efficiently and we are not benefiting from the idea that tax expenditures can be used to engineer job creation in certain sectors of the economy but more of abuse.”

In response to the Trade Minister's defense of the entities proposed for tax exemptions, stating that they deserve it as the economy stands a chance to benefit from it, Prof Bokpin questioned how the government tracks the ‘immediate and long-term benefit of the tax exemptions given.

“Who will be monitoring the immediate and long-term benefit? The others who don’t get those exemptions, are they not in here for our long-term economic benefit also? What are the criteria for selecting the beneficiaries?” he questioned.