It is likely that the National Revenue Authority (NRA) may not meet its 2023 domestic revenue to GDP target of 20% by 2023, according to Budget Advocacy Network (BAN). “NRA is still able to collect substantial domestic revenue even during the COVID-19 pandemic. However, they might not hit their 2020 revised domestic revenue target if this trend of collection continues between 1.1% and 1.2% of domestic revenue to GDP per month on average” said Abu Bakarr Kamara, Coordinator BAN.
BAN recently launched an analysis showing that domestic revenue dropped by Le 105.2 billion from March to April 2020 (from Le 470.4 billion in March to Le 365.1 billion in April 2020). Kamara explained that “Tax revenues finance basic public services delivery and help achieve the SDGs.” The analysis revealed that government is now spending more than what it is collecting from domestic revenue monthly, thus adopting other measures to finance the gap through means such as selling of treasury bearer bonds.
“Government should try to ensure that it decreases the big difference between operating expenses and domestic revenue, but social sector spending should not be affected as citizens need these services now more than before” he concluded. Improving taxation requires the political will to adopt the right mix of tax policies, and to develop the administrative capacity to implement them. The need for enhanced domestic actions to improve taxation has been well recognized for decades and received a significant boost from the adoption of the Addis Agenda of the SDGs.
The Addis Agenda recognizes domestic resources are primarily generated by economic growth, and domestic tax policies can play a crucial role in this context, by stimulating growth and promoting relevant economic sectors.
By Zainab Iyamide Joaque