National Revenue Targeting And Expenditure Projections

NEWS COMMENTARY URGES GOVERNMENT TO SET CHALLENGING REVENUE TARGETS

The inability of the revenue.

authority to set challenging revenue targets has adverse implications for the economy.

The government is unable to meet expenditure targets.

Revenue authorities have over the years been setting low targets to easily achieve them to.

escape blame for under-performing.

The Ghana Revenue Authority (GRA) is charged with the responsibility of collecting tax from individuals.

and companies with optimum efficiency as enshrined in the Revenue Authority Act, Act 791.

The Local Government Act 936 and the 1992 Constitution give the Metropolitan Municipal and District.

Assemblies, MMDAs power to generate revenues from rates, fees and tolls to finance their development.

projects.

The value for the revenue target is mostly based on the previous year’s figures and.

sometimes when the Ministry of Finance introduces a new tax they include the estimated figures.

expected to be collected.

The target of the GRA for 2015 was 21.

57billion Ghana Cedis.

The GRA collected 22.

17billion Ghana Cedis, representing 103 percent, thus exceeding its revenue collection target by 3 percentage.

points.

In 2016, the GRA was charged to collect 29 billion Ghana Cedis but it was.

able to collect 27 billion Ghana Cedis representing a 93 percent achievement.

In 2017, the authority collected 32 billion Ghana Cedis as against a target of about.

33 billion Ghana Cedis, representing 97 percent.

It is understood that 80 percent of the Ghanaian workforce is employed in the informal.

sector.

According to the GRA, 80 percent of businesses and Ghanaians in the informal sector are.

not paying taxes due to the lack of a historical database with which to track.

them.

Only 1.

2 million out of the 30 million population in Ghana are paying taxes.

Out of the 1.

2 million, 1 million are in the formal sector and 200 thousand are in the.

informal sector.

This implies that the contribution of the informal sector to total tax revenue is below.

5 percent creating a huge gap in the national revenue generation.

This information reveals that there is a significant gap between the revenue target and what.

the economy can ideally offer as revenue.

It is commendable for the government to put in place the necessary reforms.

to support revenue mobilization, such as the issuance of a National ID Card, Tax Identification.

Number, National Digital Property Addressing System, Digitalization of the Drivers’ Licence and Vehicle Registration.

Such digitalization can help reduce human involvement and the risk of collusive action in evading.

taxes.

But we should not institute these reforms just because other countries are doing so.

There is the need to ensure harmonization of all these systems and link them appropriately.

to revenue collection for the country to benefit substantially from them.

There must be proper alignment so that people who evade taxes will be unable to.

deal with vital institutions such as the Ghana Revenue Authority, Registrar-General’s Department, the Registrar of.

Co-operatives, Controller and Accountant-General, Passport Office, Driver and Vehicle Licensing Authority, Ghana Immigration Service, Metropolitan,.

Municipal and District Assemblies, Ministries, and Departments and Agencies.

The collection of property taxes is one area of revenue that the MMDAs could strongly.

pursue.

The property tax collection is low partly due to insufficient valuation capacity and the high.

cost of valuation.

To enhance efficiency both in the valuation of properties and revenue collection process from this.

source, the GRA must collaborate with the Ministry of Local Government and Rural Development to.

support the 254 MMDAs in the assessment and collection of property taxes.

The Ministry of Local Government and Rural Development must also assist MMDAs to collect data.

to determine their revenue collection potential.

We can also use some of the employees under the Nation Builders Corps programme and.

National Service Scheme for data collection and analysis on businesses.

The database can help Assemblies to set realistic revenue targets.

This will also help the Administrator of the District Assemblies Common Fund in deciding on.

the 6 percent revenue improvement factor in the allocation of the fund to MMDAs.

With efficient revenue administration, we can reduce the budget deficit which poses a threat to.

macroeconomic stability in Ghana.

BY: DR ERIC AKOBENG, AN, ECONOMIST.