Timely, accurate data are keys to precision in revenue targets

Accra, Sept. 26, GNA - Mr Harry Owusu, Executive Secretary of Revenue Agencies Governing Board (RAGB), on Tuesday stressed the need for timely and accurate data if the country was to meet its revenue targets with precision.

"Credible data base and timely information from the Statistical Service on the various parameters, such as macroeconomic indicators, are crucial to making reliable and precise projections of Government revenue targets," he said.

Mr Owusu said this in Accra at a day's workshop on tax revenue forecasting in Germany under the auspices of the German Technical Cooperation (GTZ) in collaboration with the RAGB. The workshop provided an insight into how Germany deals with the issue of tax revenue forecasting and more especially how the model could be imported into Ghana for effective fiscal policy planning. Mr Owusu noted that currently the Government of Ghana was applying the "Duke Model of Tax Revenue Forecasting", which was adopted four years ago after a workshop in Accra by delegates form the Duke University, US.

He said this second workshop by the GTZ on the same issue was to offer the opportunity to Ghana to have a comparative study of the two models for the country's advantage. Prior to the exposure of these models, Ghana relied on historical trends to make its projections, which local tax authorities say largely depended on the exchange rate volatility as a key parameter, among other things.

Such a system according to Mr Owusu made it difficult to forecast since it lacked scientific verification. He said in those times budgets were prepared against certain expenditures, which Government collated from the various institutions to make revenue projections.

Explaining Germany's model, Mr Klaus Klotz of German Federal Ministry of Finance, took participants through the essence of tax revenue estimation, how estimations were done, who estimates, how precise they were and the mode of monitoring tax revenue. He said tax revenue forecasting should be integrated into the budget planning process as well as institutionalised in the various organisations or groups that existed to work on tax revenue generation. "Precision is very important in estimating tax revenue. The precision in the forecast depends on, among other things, the precision of the GDP forecast." Mr Klotz stressed the need to have a simplified model for forecasting so as to make things clearer and better for politicians' appreciation of the figures that would be arrived at. He said over and under estimation of tax revenue were both not good for the economy since they created fiscal problems for financial players and Government. 26 Sept. 06