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A glance at revenue collection of Afghanistan

Ajmal Rahimi-Afghanistan is one of those countries which have less national revenue output. Over the decades it is considered as one of the poorest country in the world, after the toppling of the Taliban regime, economic and social growth once again breath—but yet to fully. Afghanistan and the United States have signed a long-delayed agreement to allow international forces to stay in the country beyond 2014. This was an important step for the government of Afghanistan to become self-dependent–before that 90 percent of the national budget was funded by the US—we are still to fill the vacuum principally. And international community for the fulfillment of its national budget and it was a challenge to the country revenue to augment the government expenditures, more than three decades of war and political instability have left the country in ruins and great destitution. The main source of income is agriculture, and during its good years, it produces enough food and eatable items, creating a surplus for export.

Industry is also based on agriculture and pastoral raw materials in Afghanistan. The country is still dependent on foreign aid after more than a decade of Western aid projects designed to make the Afghan economy self-sustaining, government revenue continues to fall short of projections, leaving the country in dire economic straits just as foreign funding begins to dry up. Afghanistan national budget continues short falling roughly around 20 to 30 percent yearly. According to the World Bank, the country will need more than $7 billion annually for the next decade to sustain a functional government, maintain infrastructure and fund the Afghan army and police. But there are already signs that foreign donors might not have an appetite for such a commitment, while US officials acknowledge the gravity of Afghanistan’s economic problems, arguing that the country should be able to steady the budget without halting government salaries. They also suggest that revenue could increase if key reforms are implemented including better management of income, using the modern technological, innovations and avoid Corruption. There are numerous factors that lead to corruption and bribery among politicians and public officials. Corruption is a serious quagmire for Afghans. There are two main reasons for public officials to lift their hands for bribery. The first—is that the person who is involved in corruption does not trust the stability of the institutions. He/she is of the belief that the government institutions will collapse soon and the regime will change. Either the Taliban insurgents would take over or some other political groups. This may disrupt their flow of income. So they collect as much money as possible illegally. The second—is that public officials do not have job security so for these all together caused big deficit in revenue total output, hopefully this year Afghanistan is expected to pay for roughly 20 percent of its own budget. The US officials had hoped revenue would steadily increase as foreign funds tapered off to avoid a dramatic contraction.

It now appears that such a contraction is inevitable, domestic revenue has consistently increasing over the years taxes and customs tariffs are the only significant sources of revenue. After posting robust growth between 2005 and 2012, Afghanistan’s economy is expected to grow 1-2 percent in 2015.  This growth will not be sufficient to cover anticipated government budget deficits.  As such, we anticipate the Afghan government will seek to increase domestic revenue generation by implementing reforms that should lead to private-sector-led development and growth. In 2014 while the target in revenue collection was US$ 178 million, the actual collection fell short by US$ 30 million reaching only to US$148 million for the year. However, things started to improve by 2015 when US$181 million was collected in government tax revenue against a predetermined goal of US$169 million. The trend continued in 2016 when the total revenue collection summed up to US$ 245 million against a goal of US$ 196 million, indicating US$ 49 million worth of additional revenue beyond the target for the year. But those collection processes are riddled with problems mostly hurdles in the rules and procedures of trade and revenue collection with poor managing in the top level of authorities and lack of economic experts are the biggest avoidance towards the pure collection of revenue output which caused deficit to augment the interior demand of government hardly half of the demand. Ministry of Finance of Afghanistan was 62 percent behind the target in 2014 as it sought to collect 133,200.47 million Afs, but only managed to collect 38 percent of the planned amount, or 50,938.53 million Afs. The factors regarding political, economic, social, legal technological and environmental have been identified as contributing to such poor revenue collection which most revenue collection procedures depend on government policies. Changes in taxation, economic growth, interest rates and inflation can have a negative impact on the behavior of taxpayers. Revenue collection officers often use paper-based systems, which limit the capacity to perform their duties effectively and in a timely manner. At present, paying taxes incurs an additional logistical and financial burden on citizens, particularly residents of the most rural communities, who must organize their work schedule and travel great distances to pay their taxes. In the rest of the world, the government enables citizens to pay taxes from their homes (online) or within their own communities (sending the final documents through the mail). The security situation and lack of functioning infrastructure limits the mobility of taxpayers and tax collectors; twenty-one of Afghanistan’s 34 provinces are currently in a state of conflict or partial conflict. In order to establish efficient and sound revenue collection system, it is important to increase the overall productivity of the revenue management organization. Some points can be useful to take the country revenue in a better position including. Establishment of a Customer Care Unit, provides specialized training to tax officers on taxation and customer service skill. Introduce an online revenue collection system that included self-assessment tools, the collection of revenue through progressive taxation within the department, increase taxation on luxuries products consider to be harmful to the society.

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