LOOKING WITHIN FOR MORE REVENUE (FEB 10)

DOMESTIC revenue mobilisation is an issue that confronts many developing countries, Ghana being no exception. It is, meanwhile, the surest way to guarantee emerging economies the autonomy to prioritise and own projects they want to initiate to accelerate the development agenda.
An over-reliance on foreign sources, such as donor inflows, exposes the economy to external shocks and renders it extremely vulnerable to any challenges. In such situations, donors are easily able to dictate to the recipient country as to the use of the resources, often fashioning out schemes to serve their interests rather than those of the recipient country.
Having walked that path on several occasions, the country has been taking various steps to raise more revenue domestically.
Some of the schemes include the introduction of the Value Added Tax in 1998; the abolition of vehicle income tax collected by private transport associations with the introduction of the Vehicle Income Tax stickers; the lowering of corporate tax to encourage compliance, as well as the introduction of levies within the VAT framework to finance special areas such as health and education.
These measures have, indeed, helped to scale-up domestic revenue mobilised as a percentage of the total value of goods and services produced in the country, otherwise known as Gross Domestic Product (GDP). Domestic revenue increased from the region of GH¢1.2 billion in 2001 to the present GH¢3.71 billion as of last year. This represents a little over 21 per cent of GDP.
Recurrent expenditure, which includes money spent on government employee emoluments, hugely eats up almost every pesewa mobilised domestically.
With public sector employee emoluments currently consuming about 70 per cent of domestic revenues, the government needs to step up its domestic revenue mobilisation efforts.
A story in our paper today quoted a source as saying that the 2009 budget would, among other things, focus on increasing domestic revenue mobilisation to prevent a situation where everything was swallowed by recurrent expenditure.
The DAILY GRAPHIC calls for a look at the grey areas of tax administration and combine that with simple and traditional ways of revenue mobilisation with the view to increasing the revenue basket.
We would like to call on the public to, as a matter of right, demand VAT receipts and always insist on VAT collecting business entities and individuals complying with tax laws.
Avoiding acts that contribute to huge revenue losses, such as under-invoicing, under-declaration of taxes by entities and individuals and various forms of tax evasion shenanigans, should add a drop to the country’s tax revenue.
It is also public knowledge that many corporate institutions deduct income taxes from their employees and wantonly keep them in the company account, without forwarding them to the Internal Revenue Service (IRS). It is the view of the DAILY GRAPHIC that such practices be stopped as soon as possible.
Although it is difficult to achieve self-sufficiency in financing the country’s budgeted expenditure, it is a practicable option that the country can pursue with seriousness based on a combination of veritable strategies to increase domestic productivity.