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					 Taxation Accountability – A Tool for Delivering Democracy Dividends.




TAX ACCOUNTABILITY: A
 TOOL FOR DELIVERING
DEMOCRACY DIVIDENDS.
                                                            By


         MR. ROBERT ADE’ ODIACHI, ACTI.


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         Taxation Accountability – A Tool for Delivering Democracy Dividends.


   TAX ACCOUNTABILITY: A TOOL FOR DELIVERING
            DEMOCRACY DIVIDENDS.

Introduction
The term "Dividends of Democracy" is a widely used term since 1999
when Nigeria returned to civil rule. The term is often used to represent
positive action of government in the performance of its statutory
functions.


However, only positive ideals that are realizable exclusively under a
democracy are qualified to be called dividends of democracy. If a
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         Taxation Accountability – A Tool for Delivering Democracy Dividends.


military government performs the same activities as a democratic
government, maybe we should refer to it as "dividends of good
governance".


There are certain ideals that are exclusive to a democracy, such as
people's sovereignty, respect for the rule of law, free choice, freedom of
speech, respect for fundamental human rights, etc.


Where a democratic government observes these ideals very sincerely,
then, people can be said to be reaping dividends of democracy. Where
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         Taxation Accountability – A Tool for Delivering Democracy Dividends.


any government builds roads, schools, hospitals, those should be called
dividends of good governance.


To this extent, I crave your indulgence to tweak the title of this paper a
bit into: Tax Accountability –A Tool for delivering Good
Governance Dividends.




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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


Taxation and Accountability
To tax is to impose a financial charge or other levy upon a taxpayer (an
individual or legal entity) by Government such that failure to pay is
punishable by law. In Nigeria, tax is administered and collected on
individual incomes, company’s profits and on transactions. Taxes are
divided into direct and indirect. The direct taxes relates to charges levied
on the income and profit of individuals and companies and include
Personal Income Tax, Company Income Tax, Petroleum Profit Tax or on
transfer of ownership rights of an asset to a third party.


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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


In contrast, taxes collected from goods and services are reported as
indirect taxes. Taxes in this category are Value Added Tax which replaced
the sales tax, and customs and excise duties. These taxes are levied by
various government units according to their taxing powers as defined by
law and their adjudication reflects fiscal federalism of the three tiers of
government.


Taxation is an underrated tool in the effort to build more capable and
responsive states. The role of taxation as a central force in the
development of democracy resonates strongly throughout history. The
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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


duty of paying for government legitimizes demands for services and
accountability. When eighteenth-century American rebels declared "No
taxation without representation!", they were echoing convictions
developed in earlier struggles between rulers and revenue-producers in
Britain.


In Nigeria, the Aba riots of 1929 and the Abeokuta Women riots of the
early 1940s are examples of citizen’s protest against taxation. Democracies
are built not only on periodic elections but also on a social contract based
on bargaining over the collection and spending of public revenue.
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           Taxation Accountability – A Tool for Delivering Democracy Dividends.




Without the ability to raise revenues effectively, governments are limited
in the extent to which they can provide security, meet basic needs, and
foster economic development. Yet the political importance of taxation
extends beyond the raising of revenue.


Taxation can stimulate calls for more representative and accountable
governments, while the need to increase revenues can stimulate
institution-building.


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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


Both have the potential to bolster the legitimacy of the government and
enhance democracy. Funding state expenditures primarily through
resources that are raised without much effort (foreign aid or revenues
derived from oil and other natural resources) does little to stimulate the
development of state capacity.


In Europe, taxes not only helped create the state, they also helped make it
democratic. The origins of representative government are intimately
bound up with the evolution of taxation. When parliaments began taxing
their citizens, governments became more skilled at collecting the
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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


information they needed to respond to popular demands for
accountability. Over time, the need for revenue fostered reform of tax
systems, shifting from simple systems of "tax farming" (in which
governments delegate the collection of taxes to private individuals who
are allowed to keep a percentage) and customs duties to permanent,
modern bureaucracies.


The bargain between taxpayers and monarchs encouraged a rule of law
that protected private property rights. Backed by taxation, rulers were able
to sell bonds in private capital markets. Formed originally to finance wars,
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             Taxation Accountability – A Tool for Delivering Democracy Dividends.


these revenue authorities became essential supports for the economic
development of Europe.


Taxpayers who believe that their interests are represented in a democracy
may be more willing to pay taxes, but they also begin to believe that their
payment of taxes gives them the right to representation. According to
Governor Oshiomole at a Governor’s Forum Strategy session on IGR in
2009, ‘If the people’s votes counts, they will willingly pay their taxes because they trust
their leaders. But if the leaders are not the true representatives of the people, they will
resist whatever tax imposition. They will tell you they didn’t put you there’
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          Taxation Accountability – A Tool for Delivering Democracy Dividends.


Representation, however, is only one element of the fiscal contract. The
bargain might also involve services: public goods (such as defense,
schools, or roads) or semi-public goods (benefits provided to producers
or consumers). And it involves pressure on governments to be
accountable to taxpayers for the use of their money.


From the above, we are brought to the realization that accountability
connotes responsibility and transparency. Persons occupying positions of
authority and entrusted with huge financial resources are expected to
discharge their functions diligently and in good faith; the resources
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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


committed into their hands are to be judiciously utilized and properly
accounted for.


However, studies have shown that countries endowed with mineral
resources face fewer internal pressures to improve state capacity and
accountability. When the flow of revenue is not affected by government
efficiency, there is little incentive to improve state capacity. When
revenues do not depend on the taxes raised from citizens and businesses,
there is less incentive for government to be accountable to them. Rulers
whose revenue came without much effort found themselves making
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            Taxation Accountability – A Tool for Delivering Democracy Dividends.


decisions mainly about largesse, or as a popular saying go the distribution
of the "national cake".


However, when citizens fulfill their duties as taxpayers, they have a right
to make claims on the state for provision of public goods and public
services.


With the advent of democracy in Nigeria and realization of the need for a
shift of the source of revenue from the Oil to the non-oil sector, it is
expected that the authorities will be more transparent and open with the
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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


application of taxes collected and institute tax reforms that will clear all
ambiguities presently within the tax statutes. With this level of tax
accountability, citizens will be more responsive to public policies and
subsequently be more tax compliant.




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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


The above matrix shows that tax accountability on the part of
government result in a win-win situation for all stakeholders within the
tax value chain. With the institution of tax reforms and the adherence to
the principles of transparency and accountability in the application of
funds raised, there will be a corresponding increase in the provision of the
dividends of good governance.


As shown in the above diagram, the manifestation of the benefits of good
governance in the form of new roads, schools, hospitals, bridges etc. will
necessarily lead to a corresponding increase in the level of tax compliance
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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


of citizens. A case study is the Lagos State example, where the efforts of
the state government in the area of tax accountability, tax reforms and
provision of the benefits of good governance have resulted in increased
level of tax compliance of citizens of Lagos State.

To progress with the paper, we will have an overview of the Nigerian Tax
System, examine the Tax Revenue Performance over the past years,
review the Tax Reforms currently in place, suggest Way Forward to
improve the tax administration system that will be applied as a tool to
deliver the benefits of good governance.

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          Taxation Accountability – A Tool for Delivering Democracy Dividends.


Nigeria Tax System: An Overview

In Nigeria, the taxation system dates back to 1904 when the personal
income tax was introduced in northern Nigeria before the unification of
the country by the colonial masters. It was later implemented through the
Native Revenue Ordinances to the Western and Eastern regions in 1917
and 1928, respectively. Among other amendments in the 1930s, it was
later incorporated into Direct Taxation Ordinance No. 4 of 1940. Since
then different governments have continued to try to improve on Nigeria’s
taxation system. The general opinion among scholars is that Nigeria’s
fiscal regime is characterized by unnecessary complex, distortionary and
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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


largely inequitable taxation laws that have limited application in the formal
sector that dominates the economy.
The Nigerian tax system is basically structured as a tool for revenue
collection. This is a legacy from the pre-independence government. The
following are the basic features of the Nigerian Tax System:

   Ambiguity in the tax laws
   Inadequate Capacity of Personnel
   Low utilization of technology
   Low Contribution of taxes to Gross Domestic Product

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          Taxation Accountability – A Tool for Delivering Democracy Dividends.



   Persistent cases of Non compliance and evasion of taxes mainly in the
   public Sector and the informal Private sector of the economy.

Tax Revenue Performance

A number of factors including the recent shock in the global financial
economy, the unpredictable volatility in the world oil market, the resumed
restiveness in the Niger Delta and the unending search by the developed
economies for alternative sources of energy all emphasize the urgent need
for the diversification of the Nigerian Economy.


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          Taxation Accountability – A Tool for Delivering Democracy Dividends.


For the past years in Nigeria, oil revenue comprises on average about
85% of total revenue accruable to the Federal Government, while non-oil
revenue make up the balance. This is shown in the diagram below:


                             Federation Account: Composition of Revenue (Naira Billion)
                100%
                             623.2            857.0            773.4             1,252.5     1,336.0
                 80%

                 60%
                                                                5,287.6
                                                4,762.4
                              3,354.8




                                                                                               6,530.6
                                                                                   4,462.9
                 40%

                 20%

                   0%
                              2004            2005             2006               2007        2008

                                            Oil Revenue         Non-Oil Revenue


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          Taxation Accountability – A Tool for Delivering Democracy Dividends.


Source: CBN Annual Report 2008

Excessive dependence on oil revenues over the years have created a gap
in revenue-expenditure financing, incessant fiscal deficits and absence of
sustainability of revenue to support growing socio-economic needs of the
Nigerian economy.

Over the years, the need to develop other revenue sources especially
having a well structured tax system have remained the policy thrust of
various governments’ macro-economic policies over the years. The


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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


manifestation of these policies however leaves much to be desired
considering the available statistics.

Actual Tax Collections to GDP ratio is an appropriate measure of the
contribution of taxes to the economy of the country. Below is the
Tax/GDP ratio of the country for five years from 2004 to 2008.




Tax Collections to GDP Ratio:


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          Taxation Accountability – A Tool for Delivering Democracy Dividends.




Source: CBN Annual Report 2008

Income generated through taxation as a percentage of the GDP have
been less significant with petroleum profit taxes and trade taxes

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          Taxation Accountability – A Tool for Delivering Democracy Dividends.


accounting for over 90 percent of the collections. However, from the
diagram above, revenues from oil as a percentage of GDP grew to 32.3%
between 2004 and 2005. In 2006 oil-GDP ratio was 28.3 and 27.1% in
2008 while collections from non –oil from 2004 to 2008 as percentage of
GDP have remained at the lowest ebb at 5.3% and 5.6% respectively.

This captures the low level of collections from the non-oil sector and the
need to develop a robust tax system that will provide sustainable finance
on a long term basis and facilitate the delivery of the benefits of good
governance. The need for a major policy shift cannot be over emphasized
considering the rapid depletion of our oil reserves that, according to
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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


experts, may dry up in the next 25 years, and the development of
alternative energy sources by the major oil importers in the developed
economies.

The risk associated with placing a high reliance level on statutory allocated
revenue from the Federal purse is clearly highlighted with the recent 34%
drop in allocated monthly revenue to states. In order to alleviate this risk
and diversify reliance on oil revenue, the State Governments need to
develop, deepen and strengthen internally generated revenue sources in
order to provide social services and develop infrastructure to improve the

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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


well-being of its citizens. On the macro-level, this may require that the tax
net is widened which will reflect in the tax collection to GDP ratio.

According to the World Bank, the optimal Tax/GDP ratio for
industrialized countries is between 45-55% while for emerging and
transitional economies like Nigeria should be closer to 20%. Therefore
the current position of the contribution of tax revenue to GDP at 5.6%
requires urgent intervention so as to increase tax revenue performance.

Furthermore, the precarious state of the public finance as a function of
collections from taxes in comparison with other sub-Saharan African

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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


countries reinforces timely policy intervention by the state. For example,
in 2008 South Africa had a higher Tax/GDP ratio quadrupling Nigeria at
25.3%. Also in 2008, Zambia and Togo, countries without abundant
natural resources had a Tax Revenue to GDP ratio of 16.9% and 16.3%
respectively.




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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


Selected African Countries Tax Revenue (% of GDP)

                        YEARS
      COUNTRIES 2004      2005 2006 2007 2008
      South Africa 25.3    26.9 28.4 28.8 27.7
      Ghana        21.8    21.3 20.5 22.9 23.8
      Zambia       17.6         17.2 16.3 16.9
      Togo         14.4    13.9 14.7 16.4 16.3
Source: (World Bank, World development indication 1980-2009

Tax Reforms Review

The Nigerian Tax System has undergone several reforms geared towards
strengthening tax administration and repealing obsolete provisions in the
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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


tax laws that do not reflect Nigeria’s current realities. A review of these
reforms is as stated below:

In 2002, a Study Group (the SG) was inaugurated to review the entire tax
system in Nigeria. The terms of reference included:
- Review all aspects of the Nigerian Tax System and recommend
improvements                therein.
- Review the entire tax administration and recommend improvements in
the structure for the whole country.
- Consider measures to bring international developments in tax
administration to bear in Nigeria.
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          Taxation Accountability – A Tool for Delivering Democracy Dividends.


In 2004, a Working Group (the WG) was inaugurated to review the report
and recommendations of the SG. – The WG agreed with the SG’s
recommendations for a National Tax Policy and recommended the
creation of an autonomous National Customs & Revenue Authority to
assimilate all tax administration powers and duties with funding from
retained tax revenues.

The WG also reviewed each SG proposed modification to existing tax
laws and provided comments thereon. They include, strengthening of Tax
Administration, proposed prioritized strategies for implementing the
proposed reform and passage of new tax Bills. Subsequent to the report
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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


of the WG in 2004, the government has presented the following tax
legislation to the National Assembly:
-    The Federal Inland Revenue Service Act to establish the agency as an
autonomous body and guarantee its funding from a percentage of tax
revenue collected.

- Value Added Tax Amendment Act
- Amendments to the Personal Income Tax Act, Companies Income Tax
    Act and the VAT Act.
- For the most part, the amendment Bills reflect the recommendations of
    the SG and WG.
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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


It was expected that the new tax legislation will be passed into law by
2006. However, as at today only 4 out of the 8 Tax Bills at the National
Assembly have been passed, namely; Bill for an Act to establish the FIRS
as an autonomous Service, Companies Income Tax Act Amendment,
Value Added Tax Act Amendment, and the National Automotive Council
Act Amendment and signed into laws in 2007.

The above reforms were however pursued without a defined policy
direction; hence the introduction of a National Tax policy that will chart a
direction for Nigeria’ Tax system and establish a framework that all

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            Taxation Accountability – A Tool for Delivering Democracy Dividends.


stakeholders would subscribe to and to which they would be held
accountable.

The National Tax Policy was crafted, therefore to provide a set of
guidelines, rules and modus operandi that will regulate Nigeria’s tax
system and provide a basis for tax legislation and administration in
Nigeria. The National Tax Policy was recently approved by the Federal
Executive Council and we await its final journey to the National Assembly
for ratification.



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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


Way Forward - Recommendations

No one likes to pay taxes. But without them governments will not be able
to deliver essential services. Given that taxes are necessary, governments
should aim to ensure that tax systems are broad based, fair, efficient, and
simple to administer. Such tax regimes promote revenue collection, while
reducing opportunities for evasion.

To achieve the goal of sustainable development, there is need to regularly
institute tax reforms that will strengthen tax administration of the
country. This will necessarily enhance revenue-raising capacity of

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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


government, which in turn will allow more spending on important
services for the citizens.

To benchmark our institutions with best practice, there are certain
fundamental characteristics that leading tax administrations demonstrate.


      A professional approach to internal management issues (HR;
   strategic planning)
      Attention to cost efficiency and effectiveness
      Responsive engagement with all stakeholders
      Successful introduction of technology applications
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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


      Understanding what drives taxpayer and tax agent behaviour
      Sophisticated risk profiling and informed responses to taxpayer
   behaviour, including the areas of enforcement and service provision
      Transparency of governance and detailed performance reporting


Apart from the above features, the strengthening of Revenue generating
institutions should be further facilitated with the completion of the on-
going tax reforms. Specifically, it is expedient to fast track the process of
passing the remaining tax bills in the National Assembly, namely:
amendments to the Petroleum Profit Tax Act, Personal Income Tax Act,
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          Taxation Accountability – A Tool for Delivering Democracy Dividends.


National Sugar Development Council Act and the Custom, Excise Tariff
Consolidation Act.


The National Tax Policy, which is a document that provides a platform
for creating a tax conscious citizenry, should also be passed into law by
the National Assembly. It is pertinent to mention here that this all
encompassing document mentions the need for the tax authorities to
account for tax revenue collected. The responsibility to ensure that
proper, timely and complete account of all revenue collected is placed on
all tax authorities within the country. Tax authorities are to ensure that
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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


records of revenue collected are published in a manner which would be
available to the general public and other stakeholders in the tax system.


Tax authorities shall also provide these records formally to the Ministry of
Finance and the Accountant General’s Office at various levels of
Government. This process would act as a check on the collection and
accounting systems of tax authorities. In this way, leakages can be
promptly identified and necessary action taken to safeguard tax revenue.



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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


In addition, this would enable tax authorities properly monitor tax
collection, so that tax revenue which is not being collected can be easily
and promptly identified and collected.


Accounting for tax revenue assists tax authorities and the Government in
fiscal planning, since collection trends can be used to project revenue
which would be available to the Government. Like all other aspects of the
tax administration process, tax authorities shall also utilise electronic and
technology based systems for the purpose of accounting for tax revenue.


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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


The National Tax Policy further states that in order to create a
transparent and efficient tax system, there is need to ensure full and timely
accountability for all revenue generated by Government. This can be
achieved by regular dissemination of information to tax payers on how
tax monies collected are applied.


Where tax payers are carried along in the disbursement and utilisation of
tax revenue, it will create increased public confidence in the tax system
which in turn will increase voluntary tax compliance leading to higher tax


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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


revenue collections. It follows naturally that tax accountability can be used
as a tool to facilitate the provision of the benefits of good governance.


The National Tax Policy further states that accountability for tax revenue
to taxpayers can be achieved in the following ways:


      regular and timely publication of revenue collected in widely
   available mass media, such as newspapers, magazines, National
   Television and Radio stations and the internet;


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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


      storage of revenue information in electronic format, which is
   accessible to the general public; and
      holding of regular forums, where there is interface between
   revenue authorities/Government and the taxpayers/general public
   and where the disbursement and utilisation of tax and other revenue
   generated is discussed and clarification provided to taxpayers.


In addition to ensuring proper accountability for tax revenue collected,
there is need to ensure proper utilisation of tax revenues, given that the
revenue is generated and utilised by the Government in trust on behalf of
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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


its citizens. To this extent, tax revenue should be utilised in a manner to
achieve the objectives of the Nigerian tax system which include among
others the following:


      To promote fiscal responsibility and accountability
      To facilitate economic growth and development.
      To provide the government with stable resources for the provision
   of public goods and services
      To address inequalities in income distribution
      To provide economic stabilisation
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          Taxation Accountability – A Tool for Delivering Democracy Dividends.


      To pursue fairness and equity
      To correct Market Failures or Imperfections


As stated above, government and revenue authorities shall be responsible
for communicating the uses to which revenue is put. It is expected, that
the more effectively and efficiently revenue is utilized by Government to
create growth, employment opportunities and wealth in the economy, the
more willing taxpayers would be to meet their obligations to the
Government and discharge their duties in the overriding goal of achieving
National Development.
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          Taxation Accountability – A Tool for Delivering Democracy Dividends.




With the commitment by Government to diversify the economy in order
to develop a stable and sustainable revenue base there is need to institute
further institute tax reforms that will deepen the tax base and strengthen
the tax administration system.


Apart from tax accountability, some of the tax administrative processes
that could be further improved upon are hereby listed below:



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       Taxation Accountability – A Tool for Delivering Democracy Dividends.


   Information Gathering and Intelligence: Although the rights of taxpayers
must be respected certain information can be shared that will not
violate these rights. Tax authorities would be required to develop
workable and secure structures for intelligence and information
gathering. The tax department should have information sharing
arrangements with the central bank, the Ministry of Finance, customs
and local governments. Information to be shared can include, total
revenue receipts by type of tax, macroeconomic and sectoral
economic data, public investment, imports, exports and international


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       Taxation Accountability – A Tool for Delivering Democracy Dividends.


capital flows, data related to criminal behaviour and data related to
international transfer pricing.


   Operation and Funding for Tax Refunds: This is an important part of
tax administration and it is comforting that taxpayers understand that
they can recover excess taxes paid to the authorities in a timely and
complete manner.


   General use of automation: All modern tax administrations employ
automated systems for most of its activities. It is expected that all
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       Taxation Accountability – A Tool for Delivering Democracy Dividends.


processes starting from registration of taxpayers, filing of returns,
audits and investigations, payment of taxes and including
correspondence with taxpayers would be automated.


Tax officials should be trained in the use and maintenance of
automated systems and the general public and taxpayers encouraged
to embrace the use of these systems so that Nigeria can have a tax
system that is in line with global best practices.
   Tax Laws Enforcement: A major leakage in the tax system is tax
evasion which is illegal and punishable under the law. It is necessary to
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       Taxation Accountability – A Tool for Delivering Democracy Dividends.


send the right signals that sanctions and punitive measures will be
taken against recalcitrant offenders and non compliant tax payers.


 Conversely, compliant taxpayers should be encouraged by providing
 rewards and incentives, possibly at a forum where such tax payers
 are publicly recognized and honoured. The Lagos State example is
 instructive here.
 Taxpayers Registration: The taxpayer registry is the backbone of all
 tax administrations. tax authorities at Federal and State level shall be
 required to register all tax payers and issue a Unique Tax
                                                                    50
       Taxation Accountability – A Tool for Delivering Democracy Dividends.


 Identification Number (U-TIN) along prescribed and standard
 formats, upon registration by the taxpayers. No taxpayer should
 have more than one U-TIN irrespective of place of registration. In
 addition every U-TIN shall
 be unique to a taxpayer. The U-TIN will provide a uniform mode of
 identification for all taxpayers in Nigeria.
 Receipts and collection: The payment of taxes should be as simple and
 low cost as possible. Keeping this compliance cost down is an
 important way to encourage voluntary compliance. It is also
 necessary that the tax authorities have a payment system that will
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      Taxation Accountability – A Tool for Delivering Democracy Dividends.


 provide accurate data on a very timely basis and that this
 information directly feeds into the other information management
 systems of the tax authorities, such as the revenue tracking system
 and the taxpayer current account.
 Bank system payments: An important innovation over the past years
 has been the move to tax payment through the banking system.
 Compared to payment at government offices, banking system
 payment can be substantially more efficacious. It is usually more
 convenient for taxpayers, provides fewer errors since it is often


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      Taxation Accountability – A Tool for Delivering Democracy Dividends.


 introduced with effective automation systems and is often at lower
 cost for the tax administration.
 Customs and tax integration: A number of countries, such as
 Guatemala and Ecuador, have integrated their tax and customs
 departments into a single agency. Peru is in the process of
 integrating domestic tax administration with customs. This has a
 number of advantages; primary among them are the better flow of
 information and the ease of conducting more integrated and integral
 audits.


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     Taxation Accountability – A Tool for Delivering Democracy Dividends.


In developing countries the VAT, which is a tax on domestic
consumption, is collected as much in customs as it is in the domestic
tax administration system. Indeed, in many countries half of all gross
VAT collections occur in customs. The integration of domestic tax
agencies and the customs operations makes more and more sense as
countries move towards ever greater reliance on VAT as a revenue
source.




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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


Conclusion
Taxation can be coercive, it can be entwined with corruption, and it can
be excessive. It is not a unilaterally positive force for governance, as this
have been have pointed out in tax revolts around the world and
throughout history. Yet it is an exceptionally important force, and it
shapes governance in direct and sometimes unexpected ways. State
capacity and democracy may both be strengthened by taxation, creating
pathways to more responsive, effective, accountable and self-reliant
governance structure.


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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


More explicit attention to the political dimensions of taxation in the
developing world may produce a governance dividend. In practice, this
attention would be reflected in renewed efforts to engage taxpayers and
governments in bargaining over taxation. Tax Revenues should be seen as
part of a system of accountability between states and citizens.


Institutions should be further strengthened through regular tax reform
mechanism that will enhance capacity and widen the tax net. Citizens
should have access to information on the quantum of taxes collected and
the application or utilization of such funds as recommended in the
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           Taxation Accountability – A Tool for Delivering Democracy Dividends.


National Tax Policy document. To further empower the taxpayer in
accessing information, hitherto classified under the statutory Oath of
Secrecy, it is recommended that the National Assembly pass into law the
Freedom of Information Bill. Finally, it is critical for government to
exhibit the political will necessary to pass into law all the above
mentioned bills and policy documents.


Ladies and Gentlemen, I thank you for your time.



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         Taxation Accountability – A Tool for Delivering Democracy Dividends.


References:

     2008 CBN Annual Report and Financial Statements
     National Tax Policy (Final Draft submitted to FEC)
      Benchmarking Tax Systems, Mark Gallagher (Director, Fiscal
      Reform In Support Of Trade Liberalization, USAID)
     Taxation and Governance in Africa, take a Second Look, Deborah
      Brautigam
     The Politics of Taxation and Accountability – Eduart Gjokutaj




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posted:7/29/2011
language:English
pages:58
Description: Sales Accountability Tool document sample