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Senior Customs officer outlines measures to improve tax
revenue
Accra, Jan. 23, Ghanadot/GNA – A senior customs officer has
called for urgent decisive interventions and concrete
initiatives to exploit the national tax revenue potential,
increase revenue exponentially to help reduce the budget
deficit.
Mr Pius Paabedu Austin, who works at the Tax Policy Unit of
the Ministry of Finance and Economic Planning, cautioned
that in pursuing the objective of increasing annual domestic
revenue, increases in existing tax rates should, however, be
avoided.
Emphasis, he said, should be placed on initiatives that
would simplify taxes, broaden the tax base of existing taxes
while ensuring equity of treatment by “fencing the tax net”
around more tax payers in the informal sector of the
economy.
In a paper on the national tax agenda obtained by the Ghana
News Agency, he urged the new government to establish the
structure and framework for tax policy-making that would
achieve an efficient taxation.
These include building a new department/unit in each Revenue
Agency that would focus continually on identifying and
compiling problems, weaknesses and challenges arising from
the operations, systems and regimes of that Revenue Agency.
It should analyze these problems and challenges to efficient
revenue collection and taxation in general, formulating
draft policy solutions and placing them on the agenda of the
respective Management for discussion, review and adoption
before presentation to the Ministry of Finance and Economic
Planning for development into a national tax policy.
Mr Austin called for the strengthening of the capacity of
the newly established Tax Policy Unit in the Ministry of
Economic Planning by complementing its core staff with the
recruitment of more professional staff with knowledge and
requisite experience in taxation and build the unit into a
tax policy think tank.
He said the expanded Tax Policy Unit would then inter-alia,
collect, collate and analyze policy proposals/issues,
formulate and nurture them into policies, police their
implementation, and conduct impact assessments and
evaluations.
Mr Austin suggested that a periodic or quarterly Tax Policy
Stakeholders’ Forum may be organized under the auspices of
the Tax Policy Unit of the Ministry of Finance and Economic
Planning to highlight, discuss and resolve emerging tax
issues that require policy treatment.
At these forums, he said, major stakeholders, revenue and
allied agencies, organizations, umbrella industry and
trading associations would also be given the platform to
make presentations on tax complaints/tax policy issues and
advocate tax policy ideas/ measures and make inputs that
require policy determination for policy solutions to be
designed for them.
Mr Austin said the various exemption and tax concession
regimes needed to be reviewed as a matter of urgency to
scale down on the huge revenue losses arising from their
abuse.
“Effective administrative controls and on-line monitoring of
exemption beneficiaries must be instituted by Customs,
Excise and Preventive Service in collaboration with the Tax
Policy Unit of the Ministry of Finance and Economic
Planning. This task may be set for completion by the end of
the third quarter of year 2009.”
Mr Austin said the current structure and levels of import
duty rates remained cumbersome and complex and must be
reviewed, rationalized and simplified.
“This review and rationalization should be under taken with
the objective of encouraging local production and to make
locally produced commodities really competitive. The
Ministries of Trade and Finance should lead in this exercise
with practical inputs from industry captains and Customs,
Excise and Preventive Service. This task could be completed
in six months,” Mr Austin said.
He urged government to examine ways of freeing local
production of pre-production taxes, remove taxes on primary
and intermediate inputs for domestic production and consider
the application of a minimum post production taxes across
board.
He said the major cost components of ex-factory prices of
local industries in the food, clothing and shelter”
categories including high utility tariffs should be examined
and problem-specific measures applied to lessen the tax
burden of industries in those sectors to improve their
product competitiveness.
Mr Austin suggested that this task would be undertaken by
the Ministries of Finance and Economic Planning and Trade
and Industry with the active collaboration of the
Association of Ghana Industries and completed within eight
months.
Mr Austin noted that fake invoicing, undervaluation, and
misdirection of imports was a known avenue for massive loss
of revenue to the state.
He pointed out that studies conducted by independent
international trade bodies indicated that over eighty
percent of invoices covering dutiable imports into the
country were either fake or that values were grossly
understated with quantities and quality of goods
compromised.
“Customs, Excise and Preventive Service should be given an
emergency capacity boost in valuation techniques and
immediately ordered to build and develop reference values
and data banks for the most common imports within the
framework of World Trade Organisation Valuation rules to
guide the determination of values.”
Mr Austin noted that apart from fake invoicing, customs
examination of imports constituted a very weak link in the
customs clearance chain leading to avoidable revenue losses.
“The difficulty here is the need to resolve the conflicting
objectives of minimizing clearance delays, ensuring trade
facilitation and at the same time guaranteeing effective
examination and post release /clearance audit to prevent
revenue leakages.
“As a matter of urgency, the Commissioner, Customs, Excise
and Preventive Service may have to re-examine present
practices and modus operandi for the examination of imports
into the country and introduce a professional corps of
mobile and rotating impromptu ‘examination gangs’ whose
efforts would be complemented by similar teams of post
clearance auditors.”
Turning to broadening excise duty base, Mr Austin noted that
of the major tax types, it appeared the contribution of
excise duty to national tax revenue vis-a-vis its potential
was low, contributing 3.0% and 2.1% in 2006 and 2007
respectively to national revenue, compared to 19.3% in
Eastern and Southern African countries.
He suggested that the Tax Policy Unit of the Ministry of
Finance and Economic Planning, should be directed to examine
the basis of the excise duty regime with the view to
broadening its base to enable the state derive maximum
benefit from its huge revenue potential.
Mr Austin called for effective container accountability in
ensuring that collectible import duty was indeed collected
and accounted for, modernisation and improvements in
anti-smuggling methods and procedures, appraisal of property
taxation, development of environmental taxation policy and
fencing the informal sector in the tax net.
“If these practical measures are adopted, examined further
and implemented, not only shall we immediately have a
significant expansion in the tax revenue base, there will
also be the progressive lowering of the tax burden while at
the same time ensuring the growth and protection of local
production,” he said.
GNA
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