Impact Of Tax Reforms & Government Policies on Tax Growth

1. Impact Of Tax Reforms & Government Policies on Tax Growth BetraceThawi-Malawi

2. BACK GROUND & PROBLEM STATEMENT

3. STATISTICS ON TAX TO GDP CONTRIBUTION (WORLD BANK,2018)

4. BACK GROUND & PROBLEM STATEMENT • According to IMF report (2015) a typical developing economy collects about 15 percent of GDP in taxes, compared with the 40 percent collected by a typical advanced economy • In a ministerial statement issued on 15th May, 2018 in Addis Ababa, African Ministers of Finance, Planning and Economic development agreed to boost tax-to-GDP ratio to a minimum threshold of 20 percent of their economies, as part of an effort to realize the Continental Free Trade Area agreement (APA, 2018) • A question is how will countries achieve this 20% threshold? • This paper therefore intends to provide some of the ways that a country can achieve tax growth through reforms by using Malawi as a case study.

5. OBJECTIVE OF THE STUDY

6. LITERATURE REVIEW • A look at successful reforms between 2004 and 2015 in five low-income and emerging market economies which achieved some of the largest revenue gains showed that tax reforms are critical in increasing tax revenues. • The experiences of this diverse set of countries namely Cambodia, Georgia, Guyana, Liberia, and Ukraine show that, regardless of the constraints they face, countries can strengthen their capacity to collect tax revenue by pursuing reform strategies • Cambodia for example established a large taxpayer office which allows a country to focus tax compliance efforts on the biggest taxpayers. • The countries embarked on Enhanced audit and verification program which is risk based audit that links the likelihood and nature of an audit to the taxpayer’s inherent risks • Most of these five countries took advantage of IT systems to leapfrog their revenue mobilization reforms. Georgia successfully used smart information management systems for revenue mobilization on managing information and leveraging the power of big data to improve compliance and fight corruption. It automated most processes including e-filing and instituted a system for information sharing among tax authorities, taxpayers, and banks, as well as a one-stop Internet portal. • All the five countries established and modernized basic rules and processes for compliance. For instance, Guyana implemented a unique system of taxpayer identification numbers and streamlined its process and also introduced income tax withholding, a measure critical to fostering compliance. • In its regional economic outlook (2016), IMF indicated that Sub-Saharan African countries could increase tax revenue by an average of 5 percent of gross domestic product, much more than what they receive in international aid if they reform their tax policies.

7. Methodology • The research is quantitative and used secondary data. To measure impact of revenue growth with each reform, a percentile measurement method was implored using Microsoft Excel package. • The research has been prepared following an extensive review of available literature and the greater part of the findings of this research is based on Secondary data analysis.

8. FINDINGS: CUSTOMS REFORMS & IMPACTThis research undertook a study of all the reforms that Malawi Revenue Authority undertook from the year 2000 when the revenue authority was born. Below is summary of reforms in customs division & impacton revenue collection MRA born ASYCUDA 2.7 version Post Clearance Audit & Risk Management Unit ASYCUDA ++ version Introduction of scanners, DPC ASYCUDA ++ 18e version ASYCUDA World effect – block agents for unpaid declarations

9. FINDINGS: VAT TAX REFORMS & IMPACT Expansion of VAT NET to have wholesalers & retailers Merging of income tax & VAT office to form domestic tax division Large tax payer office was established mandatory usage of electronic fiscal device machine & msonkho online

10. THE END THANK YOU