| Country | Ghana |
| Duration | Start 1 November, 2017 till 31 December, 2021 |
| Policy field(s) |
Taxation Communication Institutional development |
| Funding | Ministry of Foreign Affairs, the Netherlands |
The Ghana Tax Revenue for Economic Enhancement (TREE) project focuses on local revenue collection in 33 Metropolitan, Municipal and District Assemblies (MMDAs) in de Ashanti Region, Central Region and Western Region. Ghanaian legislation empowers MMDAs to collect revenues from a range of sources to complement central government transfers.
The project aims to implement a sustainable process for generating revenue collection by enabling process refinement, accountability, ratepayer communications, cashless payment supported by IT solutions, and capacity development. Implementation of the project will result in increased revenues collected by MMDAs which will allow MMDAs to fund local service delivery and further revenue mobilization improvement. The project contributes to the SDG 17.
Ensuring transparency and being socially accountable to ratepayers in the revenue mobilization process is critical for helping build trust with ratepayers and encouraging voluntary and timely payment of rates owed. As a result, TREE provides technical support to the various MMDAs in the areas of transparency and social accountability as well as in general ratepayer communications. To this regard the project is contributing to SDG 16.
The wider objective of the project is to realize a sustainable increase of local tax revenues to finance improved basic services to the citizens of the MMDAs involved.
The specific objectives are:
to improve the institutional capacity and procedures of each MMDA to collect revenues and diminish the tax gap;
to implement IT in each MMDA to support the main tax business processes;
to improve the capacity of each MMDA to communicate with its citizens;
to implement participatory planning processes including social contracts with citizens;
to realize political commitment and leadership and project management expertise on ministerial level and in each MMDA to guarantee sustainability.
The expected results of the project are:
Local revenue collection has increased in 33 MMDAs the year after the interventions:
Politicial commitment, citizens engagement and trust has grown;
Extra revenue has been allocated to public service directly responding to citizens' need in 33 MMDAs.
Based on research led by the Ghanaian Ministry of Finance, the project was designed to address several challenges in local revenue collection in Ghana. Most common challenge is that MMDAs are not able to access information about property valuation due to the high cost of these services. There are no reliable databases to make billing and collection efficient. Besides, most MMDAs handwrite bills, which is a time consuming process and results in revenue leakages. Furthermore, leadership commitment and political interference hinder revenue mobilisation and collection. In most cases, little or no training programmes on communication and social skills are delivered to MMDA staff.
Over-reliance of MMDAs on central government transfers has led to the apparent neglect of improving locally generated revenues. The main project's aim is to narrow the tax gap: the difference between what can be charged and the actual revenue collected. Out of experience in previous projects it is known the tax gap at the MMDA level in Ghana appeared to be between 65 till 90 percent. Narrowing the tax gap will lead to a better financial position of the MMDAs and improvement of service delivery and increase of the satisfaction of the public.
The methodology in the project includes five different steps.
1: Analysis and strategy. An appropriate strategy to solve existing problems at MMDA level has been developed. The analyses focusses not only on improving the quality and performance of the tax administration, but also on improving service delivery to the public.
2: Organisation, processes and procedures. In close cooperation with Ministries, several solution designs are develop that serve as a guideline for all MMDA staff in Ghana. Producing solution designs for all recovery staff, taking stock of all legal instruments available and all operational instruments developed, guarantees that all lessons learnt are written down and that this serves as an instruction to all on how to minimise local tax gaps to the maximum.
3: Implementation of the TaxMan solution. A tested software solution, which supports the end-to-end (primary) process of a MMDA, plays a key role in the implementation of the change process. This type of software boosts the necessary changes because it will make the transformation tangible, measurable and sustainable thanks to the structure the software provides. The software will support the processes of distributing bills and payments electronically. An applicatiojn has been developed to collect data in the most easiest way.
4: Taxpayer communication and services. To obtain the buy-in of the public to pay taxes communication is vital. Based on a developed generic communication plan, each MMDA writes and implements a local communication plan, selects communication channels, develops communication materials and develops communication campaigns. The central theme for all communication efforts will be to inform and commit citizens in why paying tax is needed and which services has been rendered out of the extra revenues (the zonal approach).
5: Project sustainability . Improvements of tax collection and narrowing the tax gap needs attention to project sustainability as well. At each MMDA, the chief executive will delegate a focal person from their own staff who will bear overall responsibility for the implementation at the MMDA level. During a training programme, the focal persons of the different MMDAs and the chief executives will be introduced in the principles of project management, the roles and responsibilities of MMDAs in the in the Project and the different modules of the methodology used in the project. Special attention is given to the role of political leaders regarding IGF.
The project provides the MMDAs with handheld devices for data collection, an app for data collection, training for data collection, solution for e-Billing and e-Payment, training for the usage of the software, masterclasses for high level decision-makers, and customer service training.
Implementation of the project takes place in clusters of MMDAs in four groups. All activities will be organised on cluster level, meaning that representatives of six or seven MMDAs will meet each other and attend the training sessions and workshops together. The cluster will function as a knowledge platform which will allow the MMDAs to learn from each other not only throughout the duration of the project but also during the post project era. Throughout the entire duration of the project a Ghanaian project team of experts provides direct and continuous support at MMDA and Ministerial level. The Ghanaian project team will assure a permanent and regular presence and first line of support of experts in the field. The Ghanaian project team gets specialists' support from VNG International's tax experts, IT-experts and communication experts, that all have specific expertise in revenue collection. The Ghanaian project team together with the MMDAs will determine what kind of content and type of support is needed from the Dutch experts.
The project aims to implement a sustainable process for generating revenue collection by enabling process refinement, accountability, ratepayer communications, cashless payment supported by IT solutions, and capacity development. Implementation of the project will result in increased revenues collected by MMDAs which will allow MMDAs to fund local service delivery and further revenue mobilization improvement. The project contributes to the SDG 17.
Ensuring transparency and being socially accountable to ratepayers in the revenue mobilization process is critical for helping build trust with ratepayers and encouraging voluntary and timely payment of rates owed. As a result, TREE provides technical support to the various MMDAs in the areas of transparency and social accountability as well as in general ratepayer communications. To this regard the project is contributing to SDG 16.
The wider objective of the project is to realize a sustainable increase of local tax revenues to finance improved basic services to the citizens of the MMDAs involved.
The specific objectives are:
to improve the institutional capacity and procedures of each MMDA to collect revenues and diminish the tax gap;
to implement IT in each MMDA to support the main tax business processes;
to improve the capacity of each MMDA to communicate with its citizens;
to implement participatory planning processes including social contracts with citizens;
to realize political commitment and leadership and project management expertise on ministerial level and in each MMDA to guarantee sustainability.
The expected results of the project are:
Local revenue collection has increased in 33 MMDAs the year after the interventions:
Politicial commitment, citizens engagement and trust has grown;
Extra revenue has been allocated to public service directly responding to citizens' need in 33 MMDAs.
Based on research led by the Ghanaian Ministry of Finance, the project was designed to address several challenges in local revenue collection in Ghana. Most common challenge is that MMDAs are not able to access information about property valuation due to the high cost of these services. There are no reliable databases to make billing and collection efficient. Besides, most MMDAs handwrite bills, which is a time consuming process and results in revenue leakages. Furthermore, leadership commitment and political interference hinder revenue mobilisation and collection. In most cases, little or no training programmes on communication and social skills are delivered to MMDA staff.
Over-reliance of MMDAs on central government transfers has led to the apparent neglect of improving locally generated revenues. The main project's aim is to narrow the tax gap: the difference between what can be charged and the actual revenue collected. Out of experience in previous projects it is known the tax gap at the MMDA level in Ghana appeared to be between 65 till 90 percent. Narrowing the tax gap will lead to a better financial position of the MMDAs and improvement of service delivery and increase of the satisfaction of the public.
The methodology in the project includes five different steps.
1: Analysis and strategy. An appropriate strategy to solve existing problems at MMDA level has been developed. The analyses focusses not only on improving the quality and performance of the tax administration, but also on improving service delivery to the public.
2: Organisation, processes and procedures. In close cooperation with Ministries, several solution designs are develop that serve as a guideline for all MMDA staff in Ghana. Producing solution designs for all recovery staff, taking stock of all legal instruments available and all operational instruments developed, guarantees that all lessons learnt are written down and that this serves as an instruction to all on how to minimise local tax gaps to the maximum.
3: Implementation of the TaxMan solution. A tested software solution, which supports the end-to-end (primary) process of a MMDA, plays a key role in the implementation of the change process. This type of software boosts the necessary changes because it will make the transformation tangible, measurable and sustainable thanks to the structure the software provides. The software will support the processes of distributing bills and payments electronically. An applicatiojn has been developed to collect data in the most easiest way.
4: Taxpayer communication and services. To obtain the buy-in of the public to pay taxes communication is vital. Based on a developed generic communication plan, each MMDA writes and implements a local communication plan, selects communication channels, develops communication materials and develops communication campaigns. The central theme for all communication efforts will be to inform and commit citizens in why paying tax is needed and which services has been rendered out of the extra revenues (the zonal approach).
5: Project sustainability . Improvements of tax collection and narrowing the tax gap needs attention to project sustainability as well. At each MMDA, the chief executive will delegate a focal person from their own staff who will bear overall responsibility for the implementation at the MMDA level. During a training programme, the focal persons of the different MMDAs and the chief executives will be introduced in the principles of project management, the roles and responsibilities of MMDAs in the in the Project and the different modules of the methodology used in the project. Special attention is given to the role of political leaders regarding IGF.
The project provides the MMDAs with handheld devices for data collection, an app for data collection, training for data collection, solution for e-Billing and e-Payment, training for the usage of the software, masterclasses for high level decision-makers, and customer service training.
Implementation of the project takes place in clusters of MMDAs in four groups. All activities will be organised on cluster level, meaning that representatives of six or seven MMDAs will meet each other and attend the training sessions and workshops together. The cluster will function as a knowledge platform which will allow the MMDAs to learn from each other not only throughout the duration of the project but also during the post project era. Throughout the entire duration of the project a Ghanaian project team of experts provides direct and continuous support at MMDA and Ministerial level. The Ghanaian project team will assure a permanent and regular presence and first line of support of experts in the field. The Ghanaian project team gets specialists' support from VNG International's tax experts, IT-experts and communication experts, that all have specific expertise in revenue collection. The Ghanaian project team together with the MMDAs will determine what kind of content and type of support is needed from the Dutch experts.