1GzuFGC

improving the way in which taxes are collected. 68Reforms undertaken include organizing taxcollection on a functional rather than geographicbasis (e.g., business taxes, income taxes, VAT);creating independent collection agencies;issuing certificates of good tax complianceto businesses that pay their fair share; andimproving tax education and services to assisttaxpayers. 69 Reforms by the Rwanda RevenueAuthority (RRA), for example, have resulted in a60 per cent increase in government revenues asa share of GDP between 1998 and 2005—from9 per cent to 14.7 per cent. At the same time,the costs of collection have been lowered. Thereforms include strengthening the RRA’s internalorganizational structures and establishing greateraccountability with other parts of government andthe taxpayers. 70As a result of trade liberalization, some countrieshave lost revenues from trade taxes and have notadequately replaced them with other revenuesources. A study of eight countries—Côte d’Ivoire,Egypt, Jordan, Kenya, Malawi, Senegal, Sri Lankaand Uganda—compared countries that were ableto recover lost trade tax revenues with those thathad not succeeded in doing so and found thatdomestic tax reform, including an expansion ofconsumption and income taxes, was essential toprotecting government revenues. 71 More generally,macroeconomic policy should aim at expandingthe mix of revenue sources in order to expand fiscalspace and maximize potential revenue generation.The appropriate mix of taxes will vary from countryto country depending on resource endowments,administrative capacity and the structure of theeconomy. However, all countries should be ableto review the existing tax structure and tax baseand identify reforms that would increase publicresources.Mobilizing tax revenues to fund socialprotectionThe Plurinational State of Bolivia and Botswanahave used revenues generated from naturalresource extraction to finance their social protectionsystems, including health-care programmes,income support for vulnerable populations andold-age pensions. 72 Along similar lines, Papua NewGuinea is considering using revenues from gasproduction to set up a sovereign wealth fund thatcould fund social policies (see Box 4.4).BOX 4.4Creation of a sovereign wealth fund in Papua New GuineaIn May 2014, Papua New Guinea started exporting liquefied natural gas to Asia under the LNGProject, and Government revenues are expected to increase substantially as a result. In order tomanage the economic consequences of this resource boom, the Government has been consideringthe establishment of a Papua New Guinea Sovereign Wealth Fund (PNG SWF). It is hoped the SWFwill address financial management challenges—including poor accountability, weak governanceand lack of independence of fund managers—that have undermined budgetary and fiscalprocesses in the past and also allow the Government to better manage the macroeconomicconsequences of a significant increase in financial flows into the country. The establishment ofthe SWF therefore has the potential of dramatically increasing fiscal space without compromisingmacroeconomic stability. The resources generated can be used to implement and expand socialpolicies that address the challenges faced by women. 73