Dean of the University of Cape Coast Business School, Professor John Gatsi is calling for a total overhaul of the country’s tax exemptions regime to ensure that beneficiary companies who fail to live up to expectation are made to pay a penalty.
Prof. Gatsi believes the current tax exemption laws are too lax and do not live up to the objectives to which they are granted.
The economics and finance professor in an interview with The High Street Journal explained that tax exemptions are deemed as the state’s indirect investments into strategic sectors and entities of the economy to yield specified results.
These indirect investments through tax exemptions, the professor believes among others should ensure the creation of decent and sustainable jobs and technology transfer leading to the overall growth and development of the economy.
With the deficiencies in the country’s tax exemption regime, the state is mostly short-changed in the exemptions granted where the beneficiary companies do not live up to expectations. Others also fold up after receiving the exemptions.
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These indirect investments of the state, Prof. Gatsi says must not be allowed to go down the drain. He proposes that stringent standards and monitoring mechanisms be laid down before these exemptions are granted.
He added that beneficiary companies that fail to meet the set goals of the exemptions are made to pay liability to recoup the state’s investment.
“Tax exemption is supposed to bring sound jobs to the economy and what we call technology transfer. Tax exemption is supposed to contribute to the growth and revenue generation,” he emphasized.
He therefore recommended that, “when you are granting tax exemptions to a company, expect targets that the company agrees to then you set a monitoring mechanisms that will monitor to report to an authority say parliament from time to time to indicate whether or not the company is living up to expectation in terms of the tax exemptions granted.”
“If it is not living up to expectation, then the company has a liability to the country so that we don’t make tax exemptions just attractive without conditions. Tax exemptions by their nature are indirect investments of the state in the private entity. The state cannot continue to make investments in entities where the investments will not bring the results that the country desires. When you don’t meet the benchmark, you pay for it,” he insisted.
Prof. Gatsi joins a section of experts who believe the nature of tax exemptions is bedeviled with inherent challenges requiring serious attention. While Prof. Gatsi is calling for a liability clause in the system, others are calling for the elimination of cronyism and nepotism associations in the granting of tax exemptions by political actors.
