Mobilising Revenue For Development

Revenue mobilization is a difficult task for most states in Africa. These states rely mostly on borrowing and aid for their projects rather than mobilizing resources internally. There are many areas that every state can internally generate revenue to argument its foreign exchange income. The state institutions that generally deal with revenue mobilization are sometimes redundant and inefficient. Much of the revenue often earmarked for development purposes go waste as a result of misappropriation and misapplication by accountants and administrators of some state institutions.

To reverse the trend of inadequate revenue for the state to execute its programmes, the last resort becomes taxing people. The state sometimes does not consider the consequences that the citizens endure when imposing these taxes. Mobilising revenue does not constitute introducing only new forms of taxes but equally involves the maximum use of the ones available and preventing leakages in administering and the management of the existing forms of taxes properly. The types of taxes in the system are not innovative as they seem to put pressure on the expenditure patterns of those who pay them. Some experts have concluded that taxing people is a lazy way of generating revenue as it does not spur economic growth if they are misused. Taxes take away money that will have been saved or invested for capital accumulation and subsequently development. The state usually screws people in taxes and leave the citizens with little to spend.

There is no denying the fact that taxes form a key part of the many avenues to generate revenue. A possible increase in the VAT rate may push prices further up that the final consumer suffers. This is a burden to the customers of the goods and services that attract VAT eventually. Apart from consumption taxes that are comprehensive in nature, only a few people pay direct taxes. To mobilize taxes efficiently, people in the informal sector must be included in the tax bracket with a broadened tax base. Identifiable business units must be compelled to pay some forms of taxes to accumulate much money for the development of the state. With the introduction of the digitization of property and the provision of accurate addresses, broadening the tax net to capture people in informal businesses needs to be started immediately. People in the formal sectors of the economy seem to pay more taxes excluding those in the informal sector.

One of the several problems in business units is the problem of poor records keeping. To generate more revenue for the state, there must be seminars on proper records keeping formats for business units in the informal sector for accurate accounting.

Poor records keeping often lead to inaccuracies in income reporting. As such, some business units pay less taxes as they are required to. Some individuals report far less than they earn. Keeping proper books of accounts by these businesses needs to be a requirement for their existence.

While the giving of Tax waivers as incentives for foreign corporations is recommended to attract new firms to be established in the country to enhance job creation and employment eventually, there must be time limits for these waivers. The time to exempt companies from the payment of taxes should have a boundary within which they should operate. Beyond which time they must be compelled to pay the needed taxes. It must be a punishable offense if these institutions default on these obligations. There need to be clear-cut guidelines for them to follow. Indefinite tax waiving systems that are employed by some states in the third world lessen revenue generation abilities of the state. Dubious means or tactics that some corporations use to enjoy tax waivers must be checked and prevented. Rebranding and some takeovers must go through proper scrutiny to avoid fraudulent tax waivers.

Proper mobilization of revenue cannot be done without coordinating the activities of key state revenue generating agencies. The activities of key revenue collecting agencies need to be coordinated on real-time basis with new forms of technology. Technologies to monitor these institutions abounds. The acquisition of such technologies must meet the standards of the procurement laws of the state to further prevent loss of money. Quality technological equipment in this regard needs to be used. Without monitoring the activities of these institutions on real-time basis, the state incurs loss of revenue in several ways. There should be technology to verify the proper collection and reporting of revenue in the systems of these agencies. Loopholes in the collection of taxes, rates, royalties etc must be blocked. The state needs to institute proper accounting standards for revenue collection and distribution agencies. The cases of corruption in some key state revenue collection agencies indicate that there is revenue loss in the system. Therefore, there is the need to serially verify the sums of money collected as revenue.

Mobilising revenue to initiate development activities within every state is obligatory. Essentially, there should be the payment of taxes. However, the systems that have been put in place to generate revenue internally should rather be audited and monitored on real-time basis. An increase in VAT is not a remedy to the waste.

Emmanuel Kwabena Wucharey.