Accra — The government will continue the reform of the tax system started in 2009, in the medium term, with the view to plugging loopholes, reducing tax evasion, and fairly taxing rents from natural resources to make the tax system more efficient and less dependent on indirect taxes.

The Minister of Finance and Economic Planning, Dr. Kwabena Duffuor told Parliament yesterday that the NDC-led government would introduce new taxes and levies to establish the right prices for natural and environmental capital, thus generating more government revenue while providing the right incentives for reducing environmental degradation.

Increased emphasis would be placed on the evaluation of tax systems, particularly in documenting tax evasion and efforts to reduce them, and in increasing the base to ensure fiscal sustainability.

He announced that to modernize the Ghana tax system and enhance revenue administration, the management of the three revenue agencies of VAT, CEPS and IRS would be brought under the umbrella of a single Ghana Revenue Authority in 2010, as part of the e-Ghana Project. Drawing on international experience, legislation to establish the Ghana Revenue Authority has been drafted and approved by Cabinet.

According to him, the integration of the revenue functions would address the problems of duplication, streamline operational policies and procedures, minimize on administrative costs, reduce compliance cost for taxpayers, and generally improve efficiency.

Furthermore, he revealed that the tax administration reform program would continue to focus on broadening the operations of the existing Large Taxpayer Unit (LTU) to ensure that the largest companies receive genuinely integrated, one-stop tax coverage from a restructured LTU, under the Ghana Revenue Authority.

The Minister hinted that the second phase of the reforms would focus on the establishment of Medium Taxpayer Unit. In parallel with these reforms, the VAT threshold will be substantially increased in a phased-in manner.

Dr. Duffuor was quick to tell the MPs that cash management had improved significantly with the introduction of frequent and up-todate monitoring of revenues, expenditures and cash balances.

Supported by the establishment of the Treasury Single Account, the setting of monthly cash ceilings for MDAs has improved significantly. The next phase of the reform, which will be implemented next year, will involve improving expenditure projections of MDAs and aligning them with revenue inflows.

According to the 2010 Budget, the liquidity management of Government will improve significantly if the accounts of the statutory funds, such as DACF and GETFund, are maintained with the Central Bank rather than with the commercial banks as currently is the case.

He noted that discussions on this matter would take place next year with the view to establishing the possibility and mechanics of effecting this change. The Finance Minister intimated that the Budget and Public Expenditure Management System (BPEMS) which came to a halt after being rolled out to some MDAs, is being upgraded under the new Ghana Integrated Financial Management System (GIFMIS).

The first phase of the project will see the installation of hardware and software in selected MDAs on a pilot basis. The second phase of the project involves a full implementation of the new system in the pilot MDAs. Integration of the payroll management module with the new system will take place at this stage.

Dr. Duffuor disclosed that the headcount of employees in the public sector which commenced in the Ghana Health Service in 2007, followed by the Ghana Education Service in 2009 will be rolled out to the other MDAs next year.

Although the migration of 54 remaining subvented agencies onto the computerized payroll database of the Controller and Accountant General's Department has faced some technical and other logistical challenges, efforts would be made to ensure that the migration is completed by the end of fiscal year 2010. This database will be integrated into the GIFMIS by late 2010.

He hoped that weakness in the financial management system that has bedevilled the public sector for years would come to an end with the implementation of the GIFMIS.