Parliament recently amended Section 6 of the Internal Revenue Act, Act 859 of 2000 to exclude private universities from the expression "educational institution of a public character" contained in the definition of organisations exempted from paying tax.

Now Section 6 of the Internal Revenue (Amendment) Act, Act 859 of 2013 recognises only "a state-owned or state-sponsored educational institution" as an educational institution that qualifies for tax exemption.

A statement from the Ghana Revenue Authority (GRA) said Section 6 of the original Act had to be amended, because though it was meant to exempt only state-owned educational institutions, the wording of "exempt organisation", gave rise to unintended interpretations.

As expected, the amendment has ignited a furious debate on the pros and cons of the 25 percent tax on the profits of private universities that has resulted from it.

In a sharp reaction, the Conference of Heads of Private Universities of Ghana (CHPUG) called for the "immediate restoration of the tax exempt status of private universities." The private universities have warned, subsequently, that they would pass on any extra cost to the students.

A Member of Parliament has opposed the tax on private universities, stressing that they are providing a public service, and need money for expansion and like programmes, while a former Minister of Education has suggested a tax holiday for private universities similar to those granted some other sectors of the economy.

However, both a financial consultant and a social commentator also argue that private universities, unlike their state-sponsored counterparts, make profits and must pay tax on them. They support the GRA's position that private universities would pay tax on profits only, and that if they made no profit, they would pay no tax.

The GRA statement pointed out that even for state-sponsored educational institutions, profits from such aspects of their work as consultancy and other commercial units are taxable.

The Chronicle thinks that both public and private universities render invaluable public service that is praiseworthy, but while private universities recover full cost and more, the public ones do not recover even a third of their costs.

For instance, while a pharmacy student at KNUST may pay less than GH¢1,000 as academic user fee (tuition) for a whole academic year, a pharmacy student in a private university would pay not less than GH¢2,000 as tuition fee per semester, making at least GH¢4,000 for a year.

Truth be told, profit is the name of the game in the private sector. None of the 26 entrepreneurs involved in the 26 private universities currently on the market would remain there a day longer if they were to run at a loss.

So private universities make profits. There should be no doubt about that. What The Chronicle would want the government to consider further is whether or not private universities should pay the same 25 percent rate of corporate tax that the pure commercial organisations pay.

The Chronicle would urge the government to give private universities a rate of tax lower than the general private sector rate. After all, they are filling a gap that has been created by the government's inability to provide enough space for all Ghanaians who qualify for university education.

Fifty thousand students currently attend private universities in the country. Many, if not the majority of them, are Ghanaians, and would be without the benefit of university education in 21st Century Ghana, but for the private universities.

The government, therefore, has a duty to show them some gratitude in the form of a lower corporate tax rate.