A senior customs officer has called for urgent decisive interventions and concrete initiatives to exploit the national tax revenue potential, increase revenue exponentially to help reduce the budget deficit.
Mr Pius Paabedu Austin, who works at the Tax Policy Unit of the Ministry of Finance and Economic Planning, cautioned that in pursuing the objective of increasing annual domestic revenue, increases in existing tax rates should, however, be avoided.
Emphasis, he said, should be placed on initiatives that would simplify taxes, broaden the tax base of existing taxes while ensuring equity of treatment by "fencing the tax net" around more tax payers in the informal sector of the economy.
In a paper on the national tax agenda obtained by the Ghana News Agency, he urged the new government to establish the structure and framework for tax policy-making that would achieve an efficient taxation.
These include building a new department/unit in each Revenue Agency that would focus continually on identifying and compiling problems, weaknesses and challenges arising from the operations, systems and regimes of that Revenue Agency.
It should analyze these problems and challenges to efficient revenue collection and taxation in general, formulating draft policy solutions and placing them on the agenda of the respective Management for discussion, review and adoption before presentation to the Ministry of Finance and Economic Planning for development into a national tax policy.
Mr Austin called for the strengthening of the capacity of the newly established Tax Policy Unit in the Ministry of Economic Planning by complementing its core staff with the recruitment of more professional staff with knowledge and requisite experience in taxation and build the unit into a tax policy think tank.
He said the expanded Tax Policy Unit would then inter-alia, collect, collate and analyze policy proposals/issues, formulate and nurture them into policies, police their implementation, and conduct impact assessments and evaluations.
Mr Austin suggested that a periodic or quarterly Tax Policy Stakeholders' Forum may be organized under the auspices of the Tax Policy Unit of the Ministry of Finance and Economic Planning to highlight, discuss and resolve emerging tax issues that require policy treatment.
At these forums, he said, major stakeholders, revenue and allied agencies, organizations, umbrella industry and trading associations would also be given the platform to make presentations on tax complaints/tax policy issues and advocate tax policy ideas/ measures and make inputs that require policy determination for policy solutions to be designed for them.
Mr Austin said the various exemption and tax concession regimes needed to be reviewed as a matter of urgency to scale down on the huge revenue losses arising from their abuse.
"Effective administrative controls and on-line monitoring of exemption beneficiaries must be instituted by Customs, Excise and Preventive Service in collaboration with the Tax Policy Unit of the Ministry of Finance and Economic Planning. This task may be set for completion by the end of the third quarter of year 2009."
Mr Austin said the current structure and levels of import duty rates remained cumbersome and complex and must be reviewed, rationalized and simplified.
"This review and rationalization should be under taken with the objective of encouraging local production and to make locally produced commodities really competitive. The Ministries of Trade and Finance should lead in this exercise with practical inputs from industry captains and Customs, Excise and Preventive Service. This task could be completed in six months," Mr Austin said.
He urged government to examine ways of freeing local production of pre-production taxes, remove taxes on primary and intermediate inputs for domestic production and consider the application of a minimum post production taxes across board.
He said the major cost components of ex-factory prices of local industries in the food, clothing and shelter" categories including high utility tariffs should be examined and problem-specific measures applied to lessen the tax burden of industries in those sectors to improve their product competitiveness.
Mr Austin suggested that this task would be undertaken by the Ministries of Finance and Economic Planning and Trade and Industry with the active collaboration of the Association of Ghana Industries and completed within eight months.
Mr Austin noted that fake invoicing, undervaluation, and misdirection of imports was a known avenue for massive loss of revenue to the state.
He pointed out that studies conducted by independent international trade bodies indicated that over eighty percent of invoices covering dutiable imports into the country were either fake or that values were grossly understated with quantities and quality of goods compromised.
"Customs, Excise and Preventive Service should be given an emergency capacity boost in valuation techniques and immediately ordered to build and develop reference values and data banks for the most common imports within the framework of World Trade Organisation Valuation rules to guide the determination of values."
Mr Austin noted that apart from fake invoicing, customs examination of imports constituted a very weak link in the customs clearance chain leading to avoidable revenue losses.
"The difficulty here is the need to resolve the conflicting objectives of minimizing clearance delays, ensuring trade facilitation and at the same time guaranteeing effective examination and post release /clearance audit to prevent revenue leakages.
"As a matter of urgency, the Commissioner, Customs, Excise and Preventive Service may have to re-examine present practices and modus operandi for the examination of imports into the country and introduce a professional corps of mobile and rotating impromptu 'examination gangs' whose efforts would be complemented by similar teams of post clearance auditors."
Turning to broadening excise duty base, Mr Austin noted that of the major tax types, it appeared the contribution of excise duty to national tax revenue vis-a-vis its potential was low, contributing 3.0% and 2.1% in 2006 and 2007 respectively to national revenue, compared to 19.3% in Eastern and Southern African countries.
He suggested that the Tax Policy Unit of the Ministry of Finance and Economic Planning, should be directed to examine the basis of the excise duty regime with the view to broadening its base to enable the state derive maximum benefit from its huge revenue potential.
Mr Austin called for effective container accountability in ensuring that collectible import duty was indeed collected and accounted for, modernisation and improvements in anti-smuggling methods and procedures, appraisal of property taxation, development of environmental taxation policy and fencing the informal sector in the tax net.
"If these practical measures are adopted, examined further and implemented, not only shall we immediately have a significant expansion in the tax revenue base, there will also be the progressive lowering of the tax burden while at the same time ensuring the growth and protection of local production," he said.