The risks of lifting tax exemptions

"GET Exemption in Peril" deals with the challenges imposed by tax exemption for increasing state revenues.

Tax exemptions are granted to offset the negative impact of the General Excise Tax (GET) on Business-to-Business transactions and to attract economic activity.

Lawmakers agree on that i) tax exemptions should be periodically reviewed to determine whether they still make sense as a tax policy ii) set a lower 0.5 percent rate on wholesale transactions where businesses buy products from other businesses to sell as retail and iii) awarded to minimize pyramid effect.

The problem is that revenue estimates - with tax exemptions - are considerably lower than previous predictions because tax analysts suspect that lifting the exemption could change behavior among awardees. Aircrafts said that lifting tax exemption will force them to i) increase the cost of new constructions and renovations ii) scale back expansion plan iii) lay off workers and iv) increase fees.

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