Better tax collection to boost revenue

A better tax collection system could lead to beefed-up revenues for Mozambique this year, according to an International Monetary Fund (IMF) report. The fiscus is also expected to get a boost when the tax benefits for some large projects expire, said the IMF in its first review of Mozambique's economic performance in terms of the Poverty Reduction and Growth Facility (PRGF). PRGF arrangements are the IMF's concessional loan facility for low-income countries, and programmes supported by it are based on the poverty reduction strategy. Mozambique's three-year facility has been running since July 2004. As part of overhauling tax collection, Mozambique has started putting in place a new computerised system, and is also expected to put modern procedures and regulations for tax audits in place by the end of this month, the report noted. The government has continued removing obstacles to private sector development by reducing the cost of doing business, improving basic infrastructure and addressing rigidities in the labour regulations. Red tape in connection with the registration of new companies has also been reduced. "New regulations to simplify inspection procedures were issued earlier this year, one-stop shops for business registration were established in three locations in recent months, and a new decree streamlining the licensing of commercial activities was issued in mid-September 2004", the IMF reported. The government is also attempting to make labour regulations more flexible by streamlining procedures to hire expatriates, reducing retrenchment costs and facilitating temporary employment. Contracts for management of the water systems have been completed by five major cities; private concessions have been granted to operate some ports, including the one in the capital, Maputo; and selling the state-owned telecommunications company and the national airline are on track. Attempts to reform the public sector and decentralise service delivery are also moving at a satisfactory pace: the analysis of six major ministries, which will serve as the basis for restructuring them over a three-year period, has been completed; a study to determine the appropriate size of the public sector, and a proposal to reform the wage system by linking remunerations more closely to performance, are being prepared. The completion of the IMF review enabled the release of about US $2.4 million, bringing total disbursements under the PRGF arrangement to about $4.9 million. For more details: www.sarpn.org.za