Govt seeks IMF assistance on tax reforms
- June 30, 2016
- Posted by: Power Intel Consulting
- Category: Economics, Finance & accounting, Finance & accounting, Finance & accounting
The government has asked the International Monetary Fund (IMF) to review the status of the country’s revenue administration reforms.
His request comes midway into the implementation of the Ghana Revenue Authority’s (GRA’s) three-year strategic plan (2015-2017).
Some of the key reforms being undertaken by the GRA are the review of existing tax laws to bring them in line with international best practice, the introduction of an integrated ICT system to support tax administration and the setting up of an integrated Domestic Tax Revenue Division.
Meanwhile, businesses across the country and workers are agitating, contending that the tax net is not being widened to include those outside the tax bracket but rather taxes are being increased for those already compliant with the process.
Mr Terkper admitted that notwithstanding the immense reforms being undertaken by many developing countries, including Ghana, there were still challenges in the design and implementation of tax administration reform programmes.
According to him, international experience had shown that political commitment to and the sustainability of reforms were crucial, if progress could be made in resource mobilisation.
He said a key challenge for tax administrators in developing countries was the modernisation of tax administration to operate more efficiently in a complex global economic system.
He said evidence showed that although reforming the tax system could be a valuable instrument for fostering economic growth and competitiveness, the implementation of such reforms in a piecemeal manner could, in itself, become a source of uncertainty, as well as affect economic stability and undermine the integrity of the reform process.
The Finance Minister urged the participants to put issues of tax transparency high on the agenda because for many citizens details of the tax system were difficult to understand and seemed detached from everyday life.
He said many people faced the difficulty of knowing when and where to pay taxes and how much of the income earned they had to keep.
Govt must be accountable
Mr Terkper, however, pointed out that although tax was necessary to support critical public services, governments did not have the right to take more than the tax laws permitted.
He said there was the need for governments to be accountable for the revenue they raised, how they raised it and how they spent it.
Mrs Katrine Baer of the Fiscal Affairs Department of the IMF, noted that the ATI provided a new dynamic framework for action to enable partner countries to increasingly rely on domestic revenue to fund their development agenda and meet the Sustainable Development Goals (SDGs) by 2030.