Business News Tue, 20 Aug 2013

Don't tax hospitals and schools - Patrick Awuah

Government should not tax education and health if it desires to accelerate the country’s development and raise those sectors to international standards, President of Ashesi University Patrick Awuah has said.

Ghana’s about-50 universities (public and private) are still not enough to take in the students who are churned out every year from Senior High Schools. On the contrary, South Korea, with a population that is twice that of Ghana’s, has eight times as many universities.

This, Dr. Awuah said, is woefully inadequate. “I think there are certain areas that the government should not be so eager to tax: education and health. This is pretty standard in the world. The successful economies of the world have done this very well. If Ghana wants to be successful, we have to follow models of the successful countries,” he said.

“I think if an entity decides they are going to be for profit -- which means they have shareholders and investors and they make a commitment that when they make profit they distribute it to their shareholders -- yes, absolutely, they should pay tax.

“But if somebody does a non-profit hospital -- for example the church mission hospitals -- they make a surplus but because they are non-profit, they are bound by regulation that the money goes back into the hospital. Then that should be a non-tax entity.”

Dr. Awuah said with the right incentives the private sector can help bring about quality education in Ghana. In South Korea, according to him, when individuals and institutions started establishing schools in the 1950s, the government gave subsidies to private universities to get them started.

The United States also created Land-Grant Universities, whereby the government donated land to start both public and private universities. In Ghana, however, a new debate has started over attempts to tax private universities, which many see as a counter-productive policy given Ghana’s dire need for more higher-education opportunities.

“The long-term view is we need to build a higher-education system that matches the best in the world. If you look at South Korea today, a country with a population of 50 million people, they have about 400 universities. Ghana has 25 million people and we have fewer than 50 universities.

“So we have a long way to go. If we are to rival South Korea, we should have about 200 universities. The government needs to understand that they need all the help they can get,” said Dr. Awuah, who previously worked with software giant Microsoft in the US.

“We need to get private universities that are bringing in their own resources and making big investments and educating students. We need to have a system in which there is space for non-profit private universities that commit to ploughing back any surpluses into education -- like granting scholarships and others.”

Dr. Awuah, who founded Ashesi University to deepen liberal arts education in Ghana, said he would not have started his project if non-profit universities were taxable. “So, if they make this policy, there are people thinking of setting up non-profit universities who will step back,” he said.

Source: B&FT