Accra (Greater Accra) 17 May 2001
The Minister of Finance on Wednesday expressed displeasure at the mode of revenue collection and charged the agencies to live up the to the task.
He condemned current collection patterns saying the rates do not meet the domestic needs of the nation, thus creating a gaping hole in the national budget.
Mr Yaw Osafo-Maafo said these at a meeting with the newly appointed heads of revenue collecting agencies. They included the Internal Revenue Service (IRS), Customs, Excise and Preventive Service (CEPS), VAT Service and the Department of National Lotteries.
Mr Osafo-Maafo said Ghana has a tight budget and until revenue collection goes beyond 50 per cent, we have a problem and cannot rest.
He attributed the tax gap to the numerous exemptions that have been granted.
It is wrong to have a situation in which 45 per cent of imports are duty- free, the Minister said, adding that it was important to arrest the situation before we get to a point where foreign assistance would be required to foot bills such as salaries, wages and pensions.
He said that total revenue is still very low, it is unacceptable to have 51 per cent of total revenue going to service internal and external debt and 46 per cent going into salaries, wages and pensions.
Mr Osafo-Maafo said CEPS has an image problem and called on the new boss to ensure that the situation changes.
This can be changed through a better performance pattern.
We all have a responsibility to minimise leakage wherever they can be found. Put your house in order, the public is not happy with the way things are done now.
The Minister touched on container inspection procedures, saying that values used are a source of worry to the public.
He announced that as stated in the 2001 budget, zero-rated items have been abolished, typically non-governmental organisations, henceforth, would have to pay five per cent duty on education and health items imported into the country.
He said since Parliament is the only mandated body to raise or exempt tax, all revenue agencies should ensure that letters requesting tax exemptions are backed by law.
By this even if it is the Minister of Finance, who writes to you, make sure that the request is backed by law. We have to ensure that we go by what the Constitution and laws of the land state.
On the Value Added Tax (VAT), Mr Osafo-Maafo said he did not believe that the VAT Service is doing enough and it should work to increase the collection rate.
He said for too long individuals and companies have conveniently dodged their VAT payments to the detriment of the nation.
He said a survey he personally conducted in Kumasi and Accra revealed that most hotels are not paying the appropriate VAT rates and challenged the VAT Service to do everything to ensure that they pay up and on time.
On the Department of National Lotteries, Mr Osafo-Maafo said, the least said about the Department of National Lotteries the better.
Between 1964 and 1973, DNL provided 15 per cent of total revenue to the state. But today it pays less than one per cent,’ he said, adding that if current taxes are slapped on the DNL’s total revenue to the state, there will be nothing left for the state.
He said existing laws governing the operation of lottery in the country do not favour the DNL and charged the new head to make recommendations to him by the end of the month for onward submission to the Attorney-General for the nation to benefit fully from their operations.
Even though there are about 70 companies operating lotteries in the country, nothing comes to the state and we cannot afford that.
Mr Osafo-Maafo advised staff of the DNL to upgrade their skills since they have no choice but to computerise and ensure that no one tampers with the equipment to favour him or a group of persons.
He said an existing agreement to effect the modernisation process of the DNL would not be abandoned.
The Minister said deputy commissioners for special duties would be appointed to all the revenue agencies to, among other things, develop special tax competence in the agencies they are posted to, identify areas of tax non-compliance, develop and maintain secure data base to check leakage.
Mr Osafo-Maafo warned such persons not to undermine the commissioners but work to enhance revenue generation and mobilisation.
GRi…/
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