Identifier
Created
Classification
Origin
04ACCRA2455
2004-12-13 15:25:00
UNCLASSIFIED
Embassy Accra
Cable title:  

GHANA: POST SUPPORTS TREASURY'S CONTINUED FUNDING

Tags:  EFIN EAID GH 
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UNCLAS SECTION 01 OF 02 ACCRA 002455 

SIPDIS

TREASURY FOR ALEX SEVERENS/LUKAS KOHLER
STATE FOR RICH KAMINISKI/LARRY JOHNSTON

E.O. 12958: N/A
TAGS: EFIN EAID GH
SUBJECT: GHANA: POST SUPPORTS TREASURY'S CONTINUED FUNDING
OF THE GHANA TAX ASSISTANCE PROGRAM


Summary
-------
UNCLAS SECTION 01 OF 02 ACCRA 002455

SIPDIS

TREASURY FOR ALEX SEVERENS/LUKAS KOHLER
STATE FOR RICH KAMINISKI/LARRY JOHNSTON

E.O. 12958: N/A
TAGS: EFIN EAID GH
SUBJECT: GHANA: POST SUPPORTS TREASURY'S CONTINUED FUNDING
OF THE GHANA TAX ASSISTANCE PROGRAM


Summary
--------------

1. In 2003 the U.S. Treasury Department, with co-funding from
USAID, initiated the Ghana Tax Assistance Project, designed
to improve management and revenue collection for Ghana's IRS
and VAT Service. USAID will end its financial support of the
program in February 2005 due to budget constraints and
because the Swiss will be providing significant assistance to
Ghana's tax arena in the near term. The Ghanaian agencies
that have benefited have approached Post to support full
Treasury funding at least through year-end 2005. Post
discussed the program with Treasury's tax advisors and
Government of Ghana (GoG) authorities and concluded the
benefits are worthwhile. Post recommends further Treasury
funding through the end of 2005. End Summary

Program Background
--------------

2. The U.S. Treasury Department's Office of Technical
Assistance (OTA) initiated a Ghana Tax Assistance Project in
2002, which was co-funded by USAID. The project has provided
training, executive seminars and technical assistance to
Ghana's IRS and VAT Services to improve revenue collection.
The funding levels were USD 130,000 in CY 2002, USD 270,000
in CY 2003, and projected USD 300,000 for CY 2004. USAID,
however, has ceased its financial support of the OTA program
due to budget constraints and because the Swiss government is
planning to provide assistance to Ghana's tax agencies in the
near term. USAID will continue to work on tax policy issues
in Ghana. (Note: USAID's financial support for the program
officially terminates February 2005, but funding allotted to
the tax assistance project has already been spent. End Note)


GOG Accolades for Treasury Consultants
--------------

3. There has been positive feedback from Ghana's IRS and VAT
services as to the value and benefits of the Treasury
expertise. In a recent letter, the Commissioner of the VAT
Service, Mr. J.F. Odartey Blankson, stated that Treasury
programs and activities contributed significantly to
improvements in the outlook and appreciation of tax
management and administration issues of participants in their
daily activities and to the overall VAT Service planning
process. Blankson attributed the VAT Service's improved
performance to their enhanced management capacity and human

resource capacity. The latter was strongly linked to
training programs, which the Treasury program has actively
supported. The VAT Service is working to increase human
resource capacity to continue improvements in service quality
and tax compliance, and has requested continued Treasury
assistance towards this end.


4. Ghana's IRS expressed gratitude to Treasury and USAID for
the invaluable assistance they have provided, which has made
a visible impact on tax administration in Ghana. In a letter
from the IRS, Commissioner Janet Opoku-Akyeampong said that
Treasury consultants advised the IRS in its production of a
new collection manual which led to a doubling of collected
revenue in assessed districts during a recent pilot test.
The IRS also notes that workshops for executives contributed
to the development of the agency's vision and mission
statements. Middle level managers lauded the courses on
management skills. Currently, Treasury consultants are
assisting in formulating an appropriate management succession
plan, an audit manual, gaming legislation, and a collection
management information system to monitor collection and
identify areas that need taxpayer education and compliance.
The IRS has indicated that it requires the continued
technical assistance of Treasury consultants in order to see
these projects through to completion.

Treasury's Measurable Results
--------------

5. In addition to GOG feedback, the Tax Assistance Program
has produced some impressive statistical results. In 2003,
the IRS saw a 43.6 percent increase in revenue collection
over 2002. Current estimates for 2004 are for revenue to
increase almost an additional 50 percent over 2003. Data from
Ghana's Collection Manual Pilot districts are even more
impressive. Treasury statistics show that in one district
the revenue collected between January and July of 2004 was 78
percent higher than the same period in 2003; the other
district showed a 56 percent increase.


6. Though current indicators are impressive, Treasury
consultants expect that revenue collected will continue to
increase. Once transportation and telephones are regularly
available to Collection and Audit Specialist Inspectors,
increased field visits should facilitate the collection of
delinquent taxes, the securing of unfiled tax returns and the
addition of new non-filer taxpayers to the tax rolls,
ultimately increasing voluntary compliance and tax revenues.
(Note: USAID recently donated seven vehicles to the IRS to
complement the work of the Treasury program, specifically to
allow IRS officers to do more field work. Treasury
consultants expect this donation to result in higher tax
revenues over the next year. End Note)

Program Merits Further Funding
--------------

7. USAID has indicated that their funding freeze for the
Treasury support is solely due to budgetary constraints and
not due to any deficiencies in the program itself. Post
believes that terminating the program at this point will
interrupt the very good work that has been achieved to date.
Post supports the GOG call for continued funding of the
program and believes the program benefits are worthwhile.
Post recommends continued Treasury Department funding of the
Ghana Tax Assistance Project through at least the end of

2005.
LANIER