Govt infrastructure tax scheme should be repealed: Report

THE Government’s infrastructure tax credit scheme should be repealed, according to a preliminary report by the National Research Institute.
Monash University researcher Dr Diane Kraal prepared the report with Dr Francis Odhuno, of the NRI.
They recommended that the government focuses on its role of collecting tax and providing infrastructure. That responsibility must not be given to the private sector.
The presentation was organised as part of a consultative workshop with stakeholders of the extractive sector.
The repealing of the infrastructure tax credit scheme was one of eight recommendations put forward.
According to the report, when the government provided this incentive to companies, they only developed the project-impact areas.
If the government repealed the scheme and collect tax as it should, revenues from this can be allocated as grants equitably to provinces, the report said.
Internal Revenue Commission’s director of resource policy and advice Ketty Masy said that through the scheme, basic services were provided to the people.
Masy said that although the IRC was missing out on taxes, the services provided to the people by developers were very much needed.
Masy said the scheme was initiated because project-affected areas were in very remote areas and it was difficult for the government to provide services.
Masy suggested that the tax credit scheme should not be repealed totally but be amended to limit political involvement and ensure it is beneficial to the government.
Odhuno suggested a monitoring mechanism be tied in to evaluate the infrastructural developments by developers in project-affected communities.