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LRA to modernise tax systems

by Lesotho Times
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Tsitsi Matope

THE Lesotho Revenue Authority (LRA) is the country’s resourcing engine tasked with the tough responsibility of ensuring all citizens and sectors liable to pay tax make their contributions to support public services.

In recent years, tax-collection has indeed proved a difficult task, compelling the revenue authority to innovate new ways in order to fulfil its mandate.

The last financial year (2017/18) saw the LRA missing its M6.597 billion target by 9.2 percent—a situation which necessitated the development of a five-year Strategic Plan (2018-2022) with a strong emphasis on customer-care and building voluntary compliance.

This new blueprint, which was introduced in April this year, follows a realisation that the previous heavy-handed approach employed to enforce tax-compliance did not only dent the image of the authority, but also increased the cost of collecting the revenue.

Although clients are still going from pillar to post before they are eventually assisted, LRA Commissioner-General Thabo Khasipe has vowed to soon make this frustrating experience a thing of the past.

According to Mr Khasipe, the authority is now on a new drive to streamline services and ensure tax-payment becomes hassle-free.

The LRA, he says, will soon start rolling-out a five-year Tax Modernisation Programme to further develop internal computer systems and build the capacity of staff to improve service-delivery.

This modernisation programme, funded to the tune of M85 million by the African Development Bank (AfDB), will support the authority in its new strategic shift from being an aggressive tax collector to a “client-centric” approach.

Importantly, to improve its performance, the modernisation programme is expected to enhance customer-care and other human skills capacities, create systems that will ensure automatic payment of value-added tax in some sectors and build a culture of voluntary compliance, among others.

Over the next five-year period of the programme, the authority is looking at hiring more than 15 consultants who will support the implementation of the modernisation programme. Among the skills needed include auditing and conducting investigations in sectors such as finance, mining and tele-communications; E-taxing solution; development of a simplified tax regime for small businesses; and gender mainstreaming and change management.

“We have secured M85 million from AfDB to implement the second phase of the modernisation programme. This funding will help us to strengthen the work we started under the first phase. One of the areas we would like to improve is our digitalisation systems, which will include taking care of issues to do with the stability of the system as we head towards on-line taxation. Through our new strategic shift, we are also taking an inward look and will introduce various capacity strengthening trainings to motivate our staff, increase efficiency and effectiveness,” Mr Khasipe said.

The authority is looking at meeting its future targets, starting with the M6.869 billion for the current 2018/19 financial year.

Under the first phase of the modernisation programme funded by the Government of Lesotho to the tune of M160 million and implemented between 2012 and 2016, the revenue authority began the digitisation of the tax management system targeting inland taxes and customs.

However, weaknesses were identified, which included the systems’ inability to make provisions for back-up, lack of harmonisation of tax systems and lack of reporting modules to provide management with information for decision making.

“We would like to ensure that our systems can make it easy for us to access information, in addition to providing back-up. Currently we mainly depend on our manual records, which also increase the rate of error,” Mr Khasipe said.

Mr Khasipe further explained that the second phase of the modernisation programme will go a long way in re-configuring the way the revenue authority has been doing business in all the departments.

He further explained that enhanced capacities in data warehouse and business intelligence, will improve knowledge-management and promote innovations, including the designing of dashboard information architecture.

“Such innovations will enable real-time information-dissemination, trend-analysis and evidence-based decision-making.”

Although tax-collection is associated with common tax types including Companies, Personal and Value Added taxes the world over, revenue authorities also play a critical role in ensuring that governments get what they deserve from specialised sectors such as mining, tele-communications and financial services.

Indeed, Lesotho is not an exception and recently, the Minister of Mines, Keketso Sello raised concern over the low benefits the government was getting from diamond trading.

On the other hand, Mr Khasipe said the authority can do more to ensure the government gets what it deserves from such revenue sources.

“Our job is to provide that assurance that in all the sectors, including the technical and specialised sectors, the country is getting its fair dues in taxation. Through the modernisation programme, we are going to train our auditors to better understand activities in those special sectors. In addition, we are looking at establishing a unit that will specifically deal with all specialised sectors and help to address issues that are of national concern. For example, in the issue of diamond exports, we should be able to verify what is happening before we put our stamp and certify that indeed these diamonds are of the value, and the quantity that is declared on the document. Without the knowledge and understanding of the sector, it can be difficult for us,” Mr Khasipe said.

In line with its Strategic Plan, the revenue authority will focus its modernisation initiatives under five sources of capital, namely Spiritual, Social, Human Resources, Innovation and Financial.

Mr Khasipe explained the need to develop strategic resources needed to achieve the objectives in a sustainable manner.

“The Spiritual Source of Capital refers to the need to understand the worthiness of our purpose. We would like all LRA workers to understand that, we are more than tax collectors because of the nature of our mandate. As key partners in the development of this country, we need to build the appreciation of how ‘Project Lesotho’ can easily collapse without a vibrant revenue authority. As a result, the modernisation programme seeks to increase understanding internally – that what we do is more than just a job and externally communicate to the public that we are partners in the development of Lesotho,” Mr Khasipe said.

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