By Ekow Essabra-Mensah
Government says it will engage the best tax experts in the country to help develop appropriate policies and structures to raise enough money locally for its expenditure
?Ghana?s middle-income status has resulted in a reduction of concessionary loans and grants, so there?s need to re-strategise with a team of competent tax experts in coming up with the best tax policies for the country,? Deputy Minister of Finance and Economic Planning, Mr. Kweku Ricketts-Hagan said.
Opening the Chartered Institute of Taxation?s 2013 Annual Tax Conference in Accra under the theme ?Tax Revenue Mobilisation in an Oil and Gas Economy?, Mr. Ricketts-Hagan said: ?Government is committed to ensuring effective revenue mobilisation ? and, much more, its utilisation — to ensure an accelerated development of the country?s economy.
?For a country that has recently joined the oil-producing countries, the expectation of many is to see the trickle-down effect of the oil-tax revenue in the economy; however, there is need for conscious efforts at strategising if the government is to reap the full benefit of the oil find.?
Mr. Abdallah Ali-Nakyea, Director of WTS Ghana, a firm of tax attorneys and solicitors, said answers to challenges in oil revenue management will depend on the timing of spending and allocation of the spending subject to the constraints of oil-price volatility.
?Timing of spending has to do with determining current spending versus future spending — that is, how much revenue should be spent now, and how much should be saved for the benefit of future generations.
?This poses a challenge because oil is a non-renewable natural resource, hence revenue inflows will dwindle as the resource depletes. There?s therefore a need to make provisions for the future.
?Ensuring that oil revenues are properly managed to lead to economic growth and development depends on the quality of how the oil revenue is spent, sustainability of fiscal policies across political regimes, and the existence of a realistic long-term development plan with identified priority areas of development and financing needs.?
He called on the state to uphold good governance to support accountability institutions, strengthen the processes and institutions of economic management, and ensure a transparent budgeting process as well as strengthen institutions of public financial management.
?There is need for properly designed fiscal rules as these can have large benefits in terms of reduced volatility, inter-generational equity, building buffers for bad times, policy credibility, and sustainability of priority expenditures.?
The rules, he said, should be transparent, make economic sense in view of the country?s circumstances, and be simple to understand and monitor.
He proposed that oil revenues should be invested in areas such as housing infrastructure, road infrastructure and improved transportation, water and sanitation, human capital development through enhanced education and improved health delivery, sustainable and reliable energy supply, and the development of petrochemicals, agriculture and agro-business.
Many oil producing countries have found it difficult to smooth government expenditure over time and decouple it from the short-term volatility of oil revenues, leading to occasional boom-bust cycles.
Mr. Mike Kofi Afflu, President of the Institute, noted that since the?country?s oil find in 2007, there has been several signs of apprehension as to whether the oil find will be a blessing or a curse.
?These concerns, unfortunately, are not unfounded but based on the experiences of a number of developing and developed countries which concentrated their revenue mobilisation efforts on non-renewable natural resources to the detriment of their traditional tax-handlers,? he said.