Tanzania, Ghana to sign agreement on IT based tax system

Accra, Dec. 6, GNA - The Revenue Agencies Governing Board (RAGB) and the Tanzanian Revenue Authority (TRA) would sign an agreement on Wednesday to grant Ghana the rights and utilization of automated tax mechanism software known as the Integrated Tax Administration System (ITAX).

The two institutions are currently negotiating the terms of the agreement which seeks to computerize the operations of the Internal Revenue Service (IRS) to function efficiently and effectively for increased revenue.

The ITAX will subsequently enable the IRS to integrate its activities with the other revenue agencies.

Mr Harry Owusu, the Chairman of the RAGB, said in Accra on Wednesday, that the negotiations and the subsequent signing of the Memorandum of Understanding (MOU) marked a milestone in the efforts to ensure effective mobilization of revenue in the country.

He said the German Technical Cooperation (GTZ) had supported the Board by facilitating collaboration between Ghana and Tanzania to access the software to be used for the computerization programme. He said the Board had worked on a similar programme with the Large Tax Payer Unit for the past two years, which had given some measurable outcome.

He said some automation at the Value Added Tax (VAT) Service and the Customs, Excise and Preventive Service (CEPS) had improved revenue collection from the two revenue agencies but the IRS, which received direct taxes, had not seen any improvement in its work. Mr Owusu said the Board, therefore, wanted to transform the IRS to adopt current practices, the results of which would among other things, optimize service delivery and enable the Service to attend to large clientele better.

The process of automating the IRS would be undertaken on the basis of public-private partnership (PPP).

Dr Anthony Akoto Osei, a Deputy Minister of Finance and Economic Planning, said increased revenue was important to every developing country that was why Ghana had prioritized this objective in the Growth and Poverty-Reduction Strategy II.

He said the Government had managed to increase the percentage of tax of the GDP to 21 per cent from 16 per cent in 2000. Projection for 2007 is pegged at 23 per cent.

Dr Akoto Osei said there was room for improvement in the nation's tax levels to meet commitments such as the provisions in the wage bill; transfers to support the Volta River Authority and the Tema Oil Refinery to ensure that the latter did not accumulate any more debt.

He said the Government was grateful to GTZ for its assistance so far but expressed the hope that they would continue to support the automation process through the improvement of the human resource base as well as giving technical assistance.

Mr Peter Linder, German Ambassador, said his country appreciated Ghana's efforts to reduce her dependency on foreign aid and was, therefore, ready to lend support in that direction given the fact that domestic revenue mobilization was a means to meet that objective. He said the next step in GTZ's programme of cooperation with Ghana was to implement a tax policy unit within the Sector Ministry and that the necessary steps towards this goal would be completed soon. Mr Placidus Luoga, Deputy Commissioner General of Tanzania, expressed the hope that Ghana would reap greater benefits from the automation process because even without the facility, the tax level was beyond 20 per cent of GDP.

Tanzania's current tax yield is less than 15 per cent and has been using the automation system since 2002 with the assistance of the GTZ after conducting a pilot test in 1998.

The automation of Ghana' IRS is expected to simplify procedures; cut costs and time spent by the taxpayer and the tax administration; broaden the tax net and raise revenue.

The Ghana Community Network Services Limited (GCNET) is expected to be the private partner to the project by establishing GCNET 2 at an estimated cost of between 16 dollars and 18 million dollars. Mr Alwin Hoegerle, General Manager, told the GNA that the GCNET was involved in the project because of its track record with the CEPS and could provide a more flexible infrastructure and adapt to the specifications of the implementers.