• Implement the tax identification number (TIN) system throughout the
country;
• Improve the implementation of a presumptive tax system;
• Develop and implement an audit program to cover all taxes; and,
• Expand and improve VAT administration.
317
Furthermore, a recently completed study assesses revenue potential in regional
and city administrations. On implementation, study findings are expected to
further enhance government domestic revenue mobilisation efforts.
318
The CRM also notes that government dependence on external borrowings to
finance its fiscal deficit has been declining over time. As high as 7.4 percent of
GDP in 2001/02, it was 1.0 percent in 2007/08. Domestic borrowings, on the
other hand, increased dramatically from only 0.5 percent of GDP in 2001/02
to nearly 4.0 percent in 2006/07 before declining to just under 3.0 percent in
2007/08. The formation of a unified revenue agency, the Revenue and Customs
Authority, in July 2008, together with on-going tax reforms, are expected to
boost domestic revenue in absolute terms and to keep its share of GDP stable
at about 13 percent. Combined with a programme of expenditure restraint, this
is expected to result in a decline in the fiscal deficit from 3.1 percent of GDP in
2007/08 to 1.8 percent in 2008/09, and further down to 1.3 percent in 2009/10.
319
There has been a considerable shift in domestic revenue composition. The
proportion of taxes in total revenue increased from 76 percent in 2001/02 to
80 percent in 2007/08. Within tax revenues, direct taxes declined from nearly
40 percent of total tax revenues in 2001/02 to about 30 percent in 2007/08;
indirect taxes rose from 61 percent to 71 percent over the same period. Import
duties accounted for 70 percent of indirect taxes and nearly 40 percent of
domestic revenue in 2007/08.
Privatisation and Private Sector-led Growth Strategy
320
Recognising the private sector contribution to overall economic growth and
poverty reduction, government has pursued policies and programmes to
accelerate sector growth and development. PASDEP underscores integration
and interdependence between the agricultural and industrial sectors as key to
national economic development; it also recognises the importance of spurring
an expansion of the services sector. The Industrial and Trade Development
Policy Strategy under PASDEP seeks to ensure export-oriented development
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