Manual system affects revenue mobilization - Maj Ablorh-Quarcoo
Major Daniel Sowah Ablorh-Quarcoo (Rtd.), Commissioner of Internal Revenue Service(IRS), on Thursday said the national revenue agency has failed to achieve success in its revenue mobilization efforts due to its manual system of operation.
He said “Over the years, we have carried out these functions manually and have been facing a lot of challenges. According to records at the Registrar Generals Department, there are 226,760 self employed registered in the informal sector but it is sad to note that only 53,352 are registered with IRS and are being assessed to tax. Data management in a manual system is not only difficult but cumbersome and slow and as a result many potential taxpayers are able to dodge the tax net”.
Maj. Ablorh-Quarcoo was speaking at a forum on Technology Transfer organized by IRS in collaboration with Ghana–India Kofi Annan Centre of Excellence in ICT on the theme” ICT Innovation-Revenue Mobilization for National Development”, in Accra.
He said the mandate of the IRS to identify and register tax payers, establish a liability or assess them for tax, as well as efficient collection of tax and payment into the consolidated fund has been faced with numerous challenges due to the operation of the manual system.
Maj. Ablorh-Quarcoo said the cumbersome manual system of revenue mobilization has created dissatisfaction and led to an increased cost to tax clients, tax administration and the government.
“As a result of the inefficient and ineffective manual system of tax administration, the tax burden has always fallen on the few in the formal sector, although it is estimated that in terms of economic activity, about 83 percent is carried out by the self employed sector, mostly operating informal structures even though quite a significant number could be classified as earning below the taxable threshold of income liable to tax”, he said.
Maj. Ablorh-Quarcoo said IRS would use the automation of its system to increase revenue collection in order to reduce the country's dependence on donor funding.
“As a developing nation, we have depended on foreign aid, grants and loans to support our development efforts and the reality of Ghana weaning itself from donor funding has caught up with us too soon. The global crunch means a slim foreign aid to shore up our national budget thus leaving a big gap to be filled from internal courses'.
Maj. Ablorh-Quarcoo said the informal sector's contribution to direct tax was presently insignificant partly due to the limitation of IRS to manage this huge number of records manually thereby denying the State of its revenue.
“The road map to computerization of the IRS begun last year when the service was hooked onto the Ghana Computer Net and Ghana Computer Management system (GCNET-GCM) to collect taxes at the ports and entry points. The result has led to the elimination of problems such as fake tax clearance certificates, complaints by importers of delays and unethical behaviour.”
Maj. Ablorh-Quarcoo said the Service has begun computerizing its business processes on a limited process piloting 6 district offices at Tema, Kinbu, Osu, Achimiota, Agbogbloshie and Legon all in Accra through the use of Smart Tax which involved the migration of taxpayer data from the manual system into the computer and automation of cashiering functions”.
He said IRS was developing its tax management system to computerize the major businesses of registration, assessment, collection and accounts as well as networking the whole if Greater Accra Region on Wide Area Network by the end of the third quarter of the year.
Maj. Sowah Ablorh-Quarcoo said the complete automation of the system would bring forth benefits such as improving ability to access information, release of staff from desk work to increase field audit capacity, increase communication with tax clients and improve data availability for efficient revenue forecast.
Mr. Edward Larbi-Siaw, Tax Policy Adviser at Ministry of Finance, called for an efficient tax administration system that would widen the tax net and lessen the burden on clients in the tax bracket.