A World Bank policy brief has called for an establishment of a more progressive tax collection system in the district assemblies
The brief on the impacts of districts’ revenue on service delivery in Ghana identified difficulties in accessing property values and business profits, as limiting factors that inhibit the collection of property taxes and business operating license fees.
However in contrast, market traders pay daily or monthly fees to district government, as they can be easily collected.
In order to raise internal revenue, districts need to develop a tax base.
Property taxes and business operating license fees are progressive sources of internal revenue, as they are mainly taxed on wealthy households.
However, internal revenue from these sources remain low, especially in poor districts.
It shows that, there is a large disparity between the poor and rich districts in their ability to raise internal revenue, and the gap has widened over the years.
The difference in internal revenue between rich and poor districts dramatically increased between 2000 and 2010.
In 2000 and 2010, the internal revenue among the rich districts was 7 times and 9.4 times higher respectively, than the mean internal revenue of the poor districts.
Consequently, the poor districts increasingly became dependent on external revenue.
In 2010, the proportions of the internal revenue were 69 percent and 94 percent in the rich and poor districts, respectively.
Both in 2000 and 2010, the percentage of household with access to piped water and solid and liquid waste infrastructure were significantly higher in rich districts.
The results of regression analysis prove that increased external revenue improved the access to liquid waste infrastructure, the number of pupils per trained teacher, as well as the percentage of schools with drinking water in both poor and rich districts.
Subsequently, poor districts became more dependent on external revenue.
In both poor and rich districts, increased revenue improved public goods provision in some areas.
The analysis suggests that external revenue is more effective in improving public goods provision than internal revenue.
Thus, allocating more external funding to poor districts could be an effective policy intervention to close the disparity in public service delivery between the poor and rich districts.
Goldstreet Business