An Economist and Senior Lecturer at the University of Ghana says political parties should not be giving out many incentives to private companies in their bid to create jobs.
According to Dr. Priscilla Twumasi-Baffour, although the intentions are right, the promises may cost the country more than they are anticipating.
Speaking on Newsfile, Saturday, she said “when you look at cutting down and exempting private sector from paying tax, the introduction of tax support for export, newly-established firms and all that…the question I ask is, can we afford it?”
Dr. Twumasi-Baffour explained that the country has tried in years past to give new businesses tax holidays, incentives among others, however, many of them failed to create the jobs and profits they were expected to.
“A lot of up and coming firms may not necessarily be productive and deserving (of the funds they will be given). Studies have shown that in Ghana a lot of the startups do not live up to their fifth year of being founded.”
Her comment follows various promises made by the NPP and the NDC ahead of the 2020 December polls.
Among the many promises stated in its manifesto, the NDC hopes to exempt small businesses from corporate and personal income tax as well as reduce the corporate income tax for medium size companies from the current 25% to 15%.
The NPP, however, says as promised in 2016, it will offer tax incentives as part of the National Entrepreneurship and Innovation Plan (NEIP).
According to the NPP, currently, real estate developers constructing low cost affordable residential premises approved by the Minister for Works and Housing have a chargeable income tax rate of 1% for the first five years.
“But with the government budget, we are looking at payment and receipts. Covid-19 has significantly affected the receipts side and we know that there is a lot of demand on the government to meet these expenditures,” Dr. Twumasi-Baffour stated.
She explained that, it will be more beneficial for government to do an assessment of the companies before they roll out these promises.
She believes that the assessment will highlight which company is the most productive and therefore need support from the government.