Global Recession Affects Tax Collection
Though the global financial crises appear to be easing, its effects on other sectors of the country are far from over.
At a forum for Value Added Tax (VAT) Administrators in Africa (VADA), it was revealed that the global recession had affected consumption and tax collection in Africa.
In an interview with CITY&BUSINESS GUIDE after the opening of the 12th VADA forum, the Commissioner of VAT Service, Anthony Ewereko Minlah said, “VAT is a consumption tax and since spending has gone down as a result of the world economic crunch, we have also been affected.”
The three-day conference, which was under the theme, “Maximizing revenue for development in the face of a global recession-the role of audit in VAT administration in Africa,” was attended by commissioners and administrators of 16 African countries.
It is expected to improve the conduct of tax audit in the sub-region.
He emphasized the need to generate enough revenue internally to execute the national development agenda of the various member countries.
Mr. Minlah lauded the revenue authorities in the member countries for their efforts at increasing tax compliance and improving collection, explaining that “they had employed various strategies to heal the scar left by the global economic recession.”
To reduce tax evasion in Ghana, he said, his outfit had resorted to some strategies such as frequent control and audits to confirm the reliability or otherwise of tax returns of businesses.
“Normally, the compliance rate of businesses who know that they will be audited is very high while the compliance rate of those who are less likely to be audited is low,” Mr. Minlah stressed.
He therefore called for the intensification of tax audits as a means of getting businesses to comply with tax obligations, stressing, “Taxpayer audits are a central feature of the voluntary compliance system.”
Integration of revenue agencies, he noted, is creating a unique mechanism and administration structure for collecting VAT, calling on VADA to promote transparency in member countries.
In a speech read on his behalf, Dr Kwabena Duffour, Minister for Finance and Economic Planning, noted that government would not be influenced by the anticipated inflow of oil revenue by neglecting the improvement of domestic revenue collection.
“The country's quest to establish an integrated tax administration to be managed by a single revenue authority will no doubt streamline our tax mobilization efforts,” he stated.
Dr. Kwabena Duffour urged staff of revenue agencies in Ghana to position themselves to take up the challenge of becoming multi-skilled in tax collection as “we are advancing from an inferior method of administering taxes to a superior phase where our meager resources would be optimized.”
Samuel Sallas-Mensah, Executive Secretary of the Revenue Agencies Governing Board, who chaired the opening of the VADA forum, was optimistic that integration of the various revenue agencies in Africa would enhance the economic development of the region.
By Emelia Ennin Abbey