Internal Revenue projects higher revenue target for 2000

Accra (Greater Accra), 16 February 2000

The Internal Revenue Service (IRS) says it will generate a total revenue of 1.2 trillion cedis this year.

The amount is 33.08 per cent more than the 901.664 billion cedis collected in 1999, Mr David Adom, Commissioner of IRS, said at the opening of the Service's southern sector management seminar in Accra on Tuesday.

It was on the theme "Taxpayer Information - A Vital Tool for Widening the Tax Net for Raising Fair Assessment".

Mr. Adom said to achieve the set target, the general economic performance of the country must improve and be sustained.

In addition, the IRS must be sufficiently resourced and the staff adequately motivated.

The Commissioner said last year, the Service set 892 billion cedis as its target but accepted the challenge from the Ministry of Finance to collect a total revenue of 965 billion cedis based on similar conditions for achieving this year's target.

"However, the anticipated improved economic conditions gave way to a not too good performance.

"While the projected real growth in GDP was 5.5 per cent, the outturn was 4.4 per cent which is a significant negative deviation".

In addition, "the inconsistent and haphazard manner in which funds were released to the Service impeded timely implementation of our planned activities".

As a result, IRS collected 901.664 billion cedis, an increase of 14.86 per cent over 1998's collection but less than the target set by the Finance Ministry.

Mr. Adom explained that the year-to-year percentage increase in collection appeared to be small because the 1998 collection included service tax, which has now been ceded to the Value Added Tax (VAT) Service.

He noted that if the estimated service tax of 40 billion cedis, which was feasible, had been added, the percentage increase in IRS collection would have been about 20 per cent.

Another militating factor that contributed to the low revenue last year was the rippling effect of the 1998 energy crisis, which led to low profit and subsequent less corporate taxes.

This also affected dividend declared which recorded a negative deviation of 13.551 billion cedis.

Mr. Adom said 1999 should, therefore, be seen as the beginning of a new cycle of a different set of taxes, which would be continued in 2000.

He said IRS would this year improve on some of the strategies introduced last year for the realisation of the set revenue targets.

IRS will, among other things, revive its dormant Information Unit to facilitate tax-payer information and activate the Compliance Division to give support to the Collection Unit by enforcing measures.

The Service will also pursue its computerisation project and boost morale of employees to prevent the "stinking staff morale from plunging into despair and hopelessness".

In a speech read for him, Dr. Kwabena Duffour, Governor of the Bank of Ghana (BOG), said in view of low revenues from falling world commodity prices and low foreign inflows, the government had made major strides in controlling expenditure.

"But revenues have failed to keep pace, resulting in an ever-widening fiscal deficit."

The main solution to the reduction in the fiscal deficit is the increased revenue mobilisation.

This, he said, calls for a codification of the various tax laws based on an orderly statutory re-arrangement of the entire tax system in accordance with a definite outline.

Such a process will enable the tax administrators to prepare a simplified explanation of the tax structure to the lay public, which will enhance their knowledge of their duties pertaining to tax payment and ensure greater compliance.

It will also solve the problem of ignorance, reluctance and evasion.

Dr. Duffour noted that the collection and provision of information in the country is woefully inadequate and there is, therefore, the need for the development of an efficient database of the citizenry to enhance revenue mobilisation.

Nii Okai Adjei, Commissioner of the Customs, Excise and Preventive Service, and Mr Ezekiel Asamoah, Commissioner of VAT, in their goodwill messages, urged government to resource revenue collection agencies to facilitate their operations.

They also called for collaboration between the three bodies and entreated their workers not to connive with tax evaders.

Mr Victor Selormey, a Deputy Minister of Finance, said government would give priority to the needs of revenue agencies.

A similar seminar would be organised for management staff of the IRS in the northern sector at the end of this month.

GRi