Indirect tax

Given its abundant natural gas source, the relocation of significant number of industries to neighboring countries due to unreliable power supply, a modern economy in which worker productivity, life style and quality of life depends more and more on electric power, one of the strategic objectives of Vision 20:20 “for the power sector was to efficiently deliver sustainable, adequate, qualitative, reliable and affordable power in a deregulated market. It is expected that the electricity supply industry will be private sector-led with the government providing the necessary, appropriate, legal and regulatory environment”.

However, a lot more could have been achieved given the right policies and better implementation. And while the case of Nigeria may have amplified the indirect correlation between natural-resources and socio-economic development, recent studies by the World Bank has revealed that Nigeria is not alone in the list of countries caught between the paradox of abundant natural resources and unexpected disproportionate level of underdevelopment. Indeed, many underdeveloped countries are resource-rich. Ghana: “The Republic of Ghana is named after the medieval Ghana Empire of West Africa.

The actual name of the Empire was Wigwagged. Ghana was the title of the kings who ruled the kingdom. It was controlled by (Director) Sundials in 1240 AD, and absorbed into the larger Mali Empire. (Mali Empire reached its peak of success under Mans MUSM around 1307. ) Geographically, the old Ghana is 500 miles north of the present Ghana, and occupied the area between Rivers Senegal and Niger. Some inhabitants of present Ghana had ancestors linked with the medieval Ghana. This can be traced down to the Manned and Voltaic people of Northern Ghana–Marquis, Dogma and the Coma.

Anecdotal evidence connected the Scans to this great Empire. The evidence lies in names like Damson shared by the Scans of present Ghana and Mankind’s of Senegal/Gambia who have strong links with the Empire”. “Political Movements and Nationalism in Ghana (1945 – 1957) The educated Ghanaian had always been in the fore-front of constructive movements. Names that come into mind are –Dry Agree, George Ferguson, John Menses Sarah. Others like king Greater IV of Winnebago, Tumor Owes Agnomen Premier I raised the political consciousness of their subjects.

However, movements towards political freedom started soon after WI. This happened because suddenly people realized the elimination was a form of oppression, similar to the oppression they have Just fought against. The war veterans had become radical. The myth surrounding the Whitman has been broken. The rulers were considered economic cheats, their arrogance had become very offensive. They had the ruling class attitude, and some of the young District Commissioner (DC) treated the old chiefs as if they were their subjects. Local pay was bad.

No good rural health or education policy. Up to 1950 the Gobo Secondary schools in the country were 2, the rest were built by the missionaries. There was also the rejection of African culture to some extent. Some external forces also contributed to this feeling. African- Americans such as Marcus Graver and WE Du Bois raised strong Pan-African conscience. In 1945 a conference was held in Manchester to promote Pan African ideas. This was attended by Markham of Ghana, Awake of Nigeria and Wallace Johnson of Sierra Leone. The India and Pakistani independence catalysts this desire.

Sir Alan Burns constitution of 1946 provided new legislative council that was made of the Governor as the President, 6 government officials, 6 nominated members and 18 elected members”. Preliminary Problem Statement The main reason for demand for change is to take total control of the abundant resources by citizens and used to the best interest and for development of both countries. One of the countries is experiencing development with its change, while the other is still struggling with corruption and leadership problems.

I will make my paper to be about the pressure for change and the result of poor or good management of change in both countries. Through my research and writings my aim is to create steps and outlines on now best to implement and manage the change necessary for both region and also highlights the expectations of the citizens and investors for sustainable growth. Change Methodology in the revenue collection system in Nigeria and Ghana Revenue Collection and Good Governance in Nigeria “With regard to improving governance, the tax system plays a threefold role.

Firstly, a sound macroeconomic policy is a crucial precondition for stability, equity and long- term growth. An adequate fiscal policy and its administrative implementation – effective revenue collection and accountable financial management – are core elements for any strategy aiming at improving economic governance. Secondly, increasing revenue collection- through taxes, fees or user charges – reduces the penitence of the state on foreign transfers. The government is able to finance and provide public goods – be it Justice, security, or social services -Independent of the conditionality of external donors.

The underlying assumption is that there exists a close link between embroiling internal revenue and good governance. Thirdly, the tax system bears an inherent conflict between “the state” and “the citizen”, which is due to different levels of rationality. While in theory a capable state should serve in principle all citizens and, therefore, each “citizen” should be willing to contribute manically to strengthening the state’s capacity, in reality citizens usually follow a free rider’s attitude and avoid taxation as much as possible.

Therefore, a responsible, democratic, and inclusive state must ensure that tax collection is based on transparent and contestable rules in a fair manner. The way in which revenue is collected by the state mirrors its respect for citizen’s rights. Transparency and accountability in the tax system are all the more crucial as the tax administration deals with money and therefore there is receptive to unofficial payments or even corruption. Even though reforming the tax system can be a valuable instrument for fostering growth and competitiveness, the use of a profound empirical analysis of the status quo helps to minimize this risk”.

Approach and Result from Ghana The Central Government Tax System Central Government Revenue Manipulation Compared to other African countries, “Shania’s performance in revenue manipulation looks impressive. According to MIFF estimations, tax revenue collection equals 16. 3 per cent of GAP; in Western Africa, there is only C¶et d’ Vireo which provides for a higher rate of revenue collection (18. Per cent of GAP)”, while comparable figures for most other African countries are well below 15 per cent. Indirect taxes contribute the bulk of revenue (equaling 7. Per cent of GAP) to government’s coffers, while direct taxes (5. 9) and trade taxes (4. 2) come close behind. However, a closer look reveals that the bulk of VAT is levied on imports; therefore, domestic indirect tax collection is not too high. This leaves direct taxes the most important internal revenue base. Revenue collection is highly concentrated, both in terms of regional distribution as well as in terms of taxpayer. Tax collection in the Greater Sacra Region equals almost to 80% of total tax revenue and the 500 largest taxpayers contribute 60% of total tax revenue.

The Institutional Framework: Major Revenue Agencies e buy OK Shania’s central government revenue is administered by three revenue agencies. These are the “Internal Revenue Service (IRS), VAT Service (VATS), and Customs, Excises and Preventive Services (CAPS)”. A new revenue agency, the Revenue Agencies Governing Board (RAGS), was being established as the GET mission took place. Its function and role, however, were not very clear yet. IRS is responsible for administering the Income Tax Act (comprising Individual Income Tax and Profits Tax) as well as some minor taxes.

VATS is commissioned with collecting inland VAT, while the task of CAPS consists in collecting excises and trade taxes, including customs duties and VAT on imports. IRS and CAPS were established in 1986. At the same time, the National Revenue Secretariat (MRS.) was installed, but it was granted merely a weak co-ordination role. After the implementation of VAT – the first attempt to introduce VAT in 1995 had been poorly managed and the government was forced to repeal it – VATS was created in 1998.

The three revenue agencies are completely independent from each other, Because the MRS. had not been fully successful in co- ordination the revenue agencies, the government altered it in 1998 into the Revenue Agencies Governing Board (RAGA) in order to ensure stronger co-operation. However, it was only in 2002 that the Board began to work effectively. Organizational structures and procedures of the revenue agencies under the RAGA show a broad range of variation. They have different local structures and use different procedures.

While IRS covers the whole country with its local offices, VATS has only a very small number f inland offices, and CAPS covers the borders and their hinterland. Regarding processes, VATS has always been fully computerized from its very foundation and CAPS started using computers some years ago, while the IRS performs virtually all processes manually. These differential standards seriously hamper accountability and transparency in the tax system, as well as the effectiveness and efficiency of tax collection. Especially when it comes to audits and investigations, there is a dire for access to all sources of information.

Approach and Result from Nigeria One of the recurrent problems of the three-tier system in Nigeria is dwindling revenue generation as characterized by annual budget deficits and insufficient funds for meaningful growth and viable projects development. Local governments are the nearest government to the people at the grassroots in Nigeria; they are strategically located to play a pivotal role in national development. Since they are responsible for the governance of about 70 percent of the population of Nigeria, they are in vantage position to articulate the needs of the majority of Nigerian and formulate strategies for their realization.

Public revenue manipulation is one of the most keenly contested issues in Nigeria. A comprehensive review of the reports of the various commissions and government policies from the 1946 Philippians commission to the activities of the National Revenue Manipulation, allocation and fiscal commission established in 1989 could be found in Kayoed (1993), Manage (1993) and Keep (1994). Local governments in Nigeria receive statutory allocations from the two higher tiers of government (federal and states). At the present, revenue sharing formula, local governments receive 20 per cent from the federation account.

They are also statutorily entitled to 10 per cent of states’ internally generated revenue. As regards to Value Added Tax, local governments receive 30 percent in 1 8 This was snared to local governments, on the following basis: equality (50 per cent): population (30 per cent) and derivation In 1999, local governments received 35 per cent of the VAT proceeds. (20 per cent). The federal government controls all the major sources of revenue like import and excise duties, mining rents and royalties, petroleum sales tax, petroleum profit tax and companies income tax among other revenues sources.

Local Government taxes are minimal hence this limits their ability to raise independent revenue and so they depend solely on allocation from the federation account”. Conclusion: Change Image Review: Nigeria: With all the endowed resources in Nigeria, it has refused to live up to expectation, as soon as the baton was passed to the Nigerian leaders after independence, the country was not were glued together by the caretakers, then we had leaders from the three major regions of the country.

The military took over and the era of the “Director”-The Military President came in and the channel the vision of he country toward their own selfish direction. The local government is meant to drive the development, but Navigators were appointed and these are meant to be high level public workers at the favor of the Directors and the must comply with the set rules. This gave so much room for corruption, since the military had no sense of accountability towards public funds, they were not elected but appointed and imposed either we like them or not.

Then the legislators were more like the Nurturers their ability to produce intended outcome was marred. Based on the complexity of Nigeria I think for the “Coach Image” will better drive the change if everything is well laid out, getting others involved in the process. Ghana: In the case of Ghana, the change was well managed. Even though the advent or the transition from the old military to the new (Director) military ruler who later transitioned to democracy was bloody.

In Africa, the top most leaders occupy the position of “Directors” even though it’s democracy. For Shania’s revenue collection for the development, it was well managed by them, but the democratic government in Ghana was more like the Coach”, they also were able to shape the economy in the direction that suit the kind of development they required at that time. Then the Governors at state level are the “Interpreters”, they are expected to be closer to the grass root and they interpret the change from the center, they help the people understand the change.

I think Ghana got it right, because now I see that the leadership has gradually adopted the “Coach Image” and the economy is growing, that means that application is working. Comparison of results: Now that Nigeria practices democracy, I suggest that the coach image” change leadership will be more appropriate to get things done. It is working already in Ghana and due to the complex nature of Insignia’s socio-political environment; it will be a perfect solution to the change process especially in the implementation of the new automated tax system.

As per the “director” image of change, it could work during the military era but that will have a serious negative effect on the on-going change process, it will cause a lot of coercion in the process. The reason I suggested the coach image for change is that out of the six gee-political one, we are divided by languages and culture, we do not process information in the same manner, so we need a leader who will inject the necessary resources needed to make this change and allow the populace to grow into it. Carry them along and make them part of the change process expected.