Economic Governance and Management Chapter 4 Chapter 4 the development strategies and use them as tools to guide their own activities. The analysis by Parliament also has some weaknesses. The budget document does not contain adequate analysis to enlighten Parliament on the policies and reforms that informed its preparation, or on the economic effects expected from its implementation. Consequently, even if it is accessible on the government’s website, its difficult navigation makes it impossible for civil society members to use it as a reference to guide their own economic conduct. 202 516. The CRM commends the government for the efforts it has made to effect structural reforms since 2005, introduce fiscal discipline to public administration and restrict increases in spending. 517. The government introduced new and more rigorous reforms in 2006. They were accompanied by an aggressive campaign about the culture of performance in managing public funds and accountability. Indeed, the focus of these efforts was to reduce current spending and extrabudgetary costs. 518. Net expenditure and loans recorded a rapid increase of 19.3 per cent in 2008 (compared with a slight increase of 4.1 per cent in 2007), despite the commitment to contain them. In real terms, their ratio to GDP rose from 23.6 per cent in 2007 to 24.5 per cent in 2008. The highest increase is attributed to capital expenditure (64.3 per cent), which accounted for 19.4 per cent of total expenditure in 2008 compared with 13.9 per cent in 2007. This trend is a manifestation of the government’s policy to increase expenditure on investments. Payments to service public debt also increased significantly (by 20.2 per cent) and reached 22.0 per cent of the total running costs against 20.1 per cent in the previous year. The trend also reflects the weight of servicing the debt of public companies that the state guarantees. Expenditure on grants and transfers recorded an increase of 10.1 per cent in 2008. This was higher than that registered in 2007 (5.1 per cent) and is steady at 42.8 per cent of the total running costs. Expenditure for buying goods and services showed a slight growth in nominal value (3.6 per cent) and a decrease in real value. Similar trends were noted for expenses on wages and salaries. They decreased from 27.8 per cent of the total running costs in 2007 to 26.2 per cent in 2008. Budgetary discipline, as preached by the MOFEE, was ignored in 2008. For this initiative to be sustainable and have tangible effects, it is important that it falls within the scope of wider public administration reform, including parastatals, in order to internalise respect for public property. With regard to parastatal enterprises, transfers made to them as extrabudgetary expenditures Economic Governance and Management are estimated at 33 per cent of total budget. The CRM was informed that the government was determined to carry out a profound reform in the sector, particularly by liquidating those enterprises that have no strategic importance to the state and the budgeteating enterprises that are inefficiently managed. However, the government seems to be delaying implementing these reforms, thus calling into question its desire to promote transparent management in this sector. 519. In the area of tax and customs administration, the government has initiated many reforms aimed at broadening the tax base, reducing tax evasion and increasing the productivity of the tax system since 2004. The greatest reform was the establishment, in 2004, of the MRA, which became operational in July 2006. It operates as an autonomous body under the authority of the MOFEE. The management autonomy granted to this institution aims at ensuring efficiency and transparent management. Many other measures have enhanced the reform. They have helped to increase the financial base by simplifying the tax system. This has reduced tax evasion, created the property tax, introduced tax deductions at source and virtually abolished tax exemptions. The reform also affected customs tariffs. It reduced customs taxes on raw materials and simplified the tariff system, reduced registration rates to three to cut transaction costs, and improved the efficiency of tax collection services. Taxes are now paid by electronic transfer. 520. The director of the MRA enjoys increased powers for administering tax in all areas except property tax. To improve its efficiency and the output resulting from the fiscal reforms, the MRA has organised several training sessions for taxpayers and staff on the 2006/2007 reforms, their objectives and the administrative and regulatory provisions adopted to facilitate their implementation so that they all can benefit from them. In addition, the explanatory notes on these reforms and their related procedures are accessible on the MRA website. The director may also organise press conferences about the legislation on duties and taxes under his or her jurisdiction. 521. It should be noted that an appeal system has been introduced to protect taxpayers even if no appeal is provided for against certain decisions and actions of the director. If a taxpayer is wronged in the assessment of the taxes due, he or she addresses his or her appeal first to the director of the MRA. If he or she is still not satisfied, he or she may write to the Assessment Review Committee, and then to the 203