Business News of Wednesday, 20 November 2019
The Institute for Fiscal Studies (IFS), says the Finance Minister would have to do more to achieve what it describes as an ambitious revenue target for 2020.
The government in its 2020 budget is seeking to raise 67.1 billion cedis in revenue against an expenditure target of about 86 billion cedis.
This means the government would have to finance a gap of nineteen billion cedis.
But for the fact that the country has been facing revenue shortfall at least for the past three years, the IFS believes the Finance Minister would have no other option than to resort to other measures such as the strengthening of domestic tax revenue systems if it is to reach the target.
“The government’s revenue mobilization strategies, which include digitization to improve taxpayer-identification as well as revenue administration reforms to enhance efficiency, seem inadequate to achieve a significant increase in domestic revenue in both the short and medium-term,” Economist with the IFS, Leslie Dwight Mensah remarked at a media briefing on the Institute’s assessment of the 2020 budget.
For the IFS, the government can rake in more revenue if it gets the tax exemptions bill passed into law.
The economic think tank in its estimate says the country could have raked in about 500 million cedis in 2019 had Parliament passed the tax exemptions bill for it to be implemented.
The Finance Minister has carried out some major changes at the GRA in a bid to reach set revenue targets.
However, Mr Dwight Mensah believes yielding to other measures such as improving tax compliance through the Tax Identification Number system, integration of data and analytical reporting as well as reviewing the natural resources fiscal regime would be more helpful.
Meanwhile, as the government commits to a budget deficit of 4.7 per cent of GDP for 2020, the IFS says this target needs caution in terms of expenditure since 2020 is an election year.
The Finance Minister has reiterated that the government will remain committed not to exceed the 5 per cent deficit to GDP target, a resolution the IFS says can only be achieved with strict monitoring and control of public expenditure.
“The government should plug leakages, excesses and waste in all state-owned enterprises, which historically have been a major source of fiscal risks, including in election years,” Leslie Mensah added.