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Cameroun: Household benefit dominates govt’s fiscal expenditure in 2022

Cameroun: Household benefit dominates govt’s fiscal expenditure in 2022
  • Comments   -   Monday, 05 February 2024 10:56

(Business in Cameroon) - In 2022, households emerged as the primary recipients of fiscal expenditure in Cameroon, claiming 59.6% of the government's total fiscal spending of CFA490.8 billion. This marked a year-on-year increase of CFA51.2 billion, with businesses receiving only 40.4%.

According to the 2022 report on fiscal expenditures by the Ministry of Finance, household fiscal benefits constituted about 9.1% of the collected fiscal revenues, while those for businesses accounted for about 6.2%.

Fiscal expenditures, as defined by the Organization for Economic Cooperation and Development (OECD), are special measures deviating from the reference tax system, causing revenue losses for the state. These are implemented to induce specific economic behavior from taxpayers or subsidize certain social groups. Consequently, the Ministry of Finance report notes that fiscal expenditures result in taxpayers experiencing reduced tax burdens compared to those that would have arisen from standard fiscal provisions applicable in Cameroon.

As a result of Value Added Tax (VAT) exemptions, households benefited more than businesses in terms of reduced burdens. VAT, representing 19.25% of the value of each good and service, is a significant revenue source where the state foregoes income in fiscal expenditures. In 2022, the state waived CFA254.5 billion in VAT revenues to support households (CFA204.4 billion) and businesses (CFA50.1 billion). These fiscal expenditures primarily benefit households in accessing essential goods (38.8%), healthcare (4.3%), consumption support (7.3%), education, and acquiring affordable housing, constituting 60.8% of the total.

Following VAT, Import Duty Rights (IDR) come as the second-largest contributor to fiscal expenditures in Cameroon. In 2022, the state forewent revenues equivalent to CFA147.6 billion on IDR to ease the burdens of businesses (CFA82.9 billion) and households (CFA64.7 billion) through exemptions or deductions. Businesses are the main beneficiaries of state tax incentives, especially due to measures promoting the agro-pastoral sector and the 2013 law incentivizing private investment in Cameroon, granting exemptions ranging from 5 to 10 years for investment projects.

The distribution of fiscal expenditures based on their social, economic, or environmental purposes reveals that 51% of fiscal expenditures in Cameroon in 2022 targeted social objectives, compared to 45.4% for economic objectives and 1.5% for environmental goals. VAT fiscal expenditures in 2022 represented 51.9% of total fiscal expenditures, with 36.8% for social measures and 14.9% for economic objectives. For Import Duty Rights, fiscal expenditures represented 30.1% of total fiscal expenditures, with 16.7% related to economic measures and 11.6% related to social measures. As for excise duties, 49% of tax expenditure is aimed at social objectives.

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