|
 |
Oro disaster, a leadership test
By ARCHIBALD KASOKASON
RELIEF efforts in flood-ravaged Oro are likely to be short term, possibly up
to only six months.
So far, much of the aid has been to provide food, medicines, blankets, clean
water and gardening tools to the victims.
In the medium and long-term, what can the people expect in order to rebuild
their lives?
This responsibility lies first with the provincial government, and then the
National Government and international donor agencies.
The short-term relief operation is under the control of the controller of
the State of Emergency and is essentially administrative in nature.
Funding for the operation is being provided by the National Government as
well as our international development partners, local business houses,
groups and individuals.
There is an overwhelming support from across the country, and there are
people and organisations responsible for coordinating the distribution of
the relief supplies.
Political leaders do not really have a great deal to do apart from lending
moral support and duplicating the functions of the civil servants.
Oro leaders should now be concerned with the issue of life after the relief
operations.
Obviously, it will take time and lots of money to restore normalcy
throughout the province.
Apart from reconstruction and restoration of damaged infrastructure, new
facilities are also needed and people have to be resettled.
The leaders must look at ways to fund all this.
The provincial executive council and the offices of the governor and
provincial administrator should be working “flat out” to set out policy
objectives and strategies, in consultation with the National Government and
international agencies.
The National Government has already mounted the reconstruction programme to
restore the damaged infrastructure in and around the provincial centre.
The focus, however, is on restoring the trunk roads and bridges, and the
water supply for the town area, and the re-establishment of communication
links.
Schools and hospitals will also have to be restored.
With some luck, the Arek Highway will receive a little touch up as well.
However, feeder roads, bridges over small creeks, primary schools, secondary
schools, sub-health centres, aid posts and other provincial infrastructure
are likely be passed over.
The provincial government and other local authorities are expected to attend
to them.
The worst-affected areas, where people may have to relocate, are also likely
to get no assistance at all from the National Government.
The same applies to schools and health facilities.
In addition, it is fair to assume that other major transport infrastructure
requirements to connect the district and sub-district centres to Popondetta
will not be considered at all.
In the final wash-up, this Oro disaster may be viewed as an awakening
episode for us; an opportunity of a lifetime to replace and rebuild the old
rundown basic communication, transport, health and other social service
infrastructures that we have been ignoring over the past 32 years.
I hope this is what the governor meant when he said “ … this is a blessing”.
Mother Nature has an uncanny knack of intervening when nothing else seems to
work.
It is also an opportunity to institute disaster management strategies and
relocate villages and existing government facilities to safer areas to
prevent and minimise the effects of future disasters.
Whatever was lacking in our province has now been exposed – our
inefficiencies, our disunity of purpose, our internal tribal segregation,
our total lack of appropriate facilities to cater for such events, and even
the general absence of adequate and functioning basic government goods and
services delivery facilities in the outlying areas.
The opportunity should not be passed up. The lessons learned from this
disaster and the subsequent mess-up in the coordination and management of
relief operation must form the basis for planning and management of the
post-disaster reconstruction and restoration programme.
From the reports, the devastation appears widespread, some parts more
severely than others.
It is definitely beyond the capacity of the province to handle it alone, or
even the National Government for that matter.
This is a situation that calls for an all-out national and international
effort to help the province get back on its feet again.
The ball, however, is in the Oro provincial government’s court.
It has to decide if this type of effort is required, and take the lead in
pursuing the agenda.
I was involved in the Gazelle Restoration Programme in the late 1990s and
early 2000s, and I think our case is much bigger and much worse than that.
The people have never really needed their provincial government’s leadership
and support as much as they do now.
How it responds could make or break the governor and his provincial
government team of leaders.
Of course, other aspiring political leaders in the province and indeed the
rural voting population will be watching keenly to see who among the current
crop of leaders really has substance.
The time for preaching is over: it is action time and there are some issues
for thought.
The central transport and communication links will surely be re-established
through the current intervention by the National Government to allow normal
services to be restored.
What needs to follow urgently is a carefully-planned programme of
restoration and reconstruction over the next four to five years.
The restoration process must be properly controlled to have any lasting
benefit on the victims.
If the resettlement of the displaced people means relocating them to new and
safer areas, then basic service infrastructure facilities such as schools,
health facilities, clean water supply, and access road links, etc, have to
be built for them.
Following are some measures that should be taken:
l The provincial executive council to immediately pass a resolution to
establish an “Interim Oro Restoration Authority” to oversee the planning and
implementation of the efforts;
l Review and adjust the provincial development policy objectives and
development strategies to take account of the restoration programme;
l Conduct a detailed assessment of the damage;
l Compile accurate population figures by wards, LLG areas and districts to
assist the planning and work prioritisation;
l Compile an action plan for the restoration and reconstruction of the
destroyed infrastructure, and new facilities for resettlement of the
displaced population; and,
l Secure special dispensation from the National Government through the
Office of Rural Development to apply the District Development Funds for the
restoration programme.
For an effective and meaningful programme of restoration and rehabilitation,
the Oro provincial government must take ownership of it from the start.
It must play a lead role in the formulation of the programme, and in guiding
its implementation.
There must also be a team of capable and committed professionals to
spearhead the programme under the Oro Restoration Authority.
* The author, who describes himself as an “Oro patriot”, holds a
Masters Degree in Strategic Management and Planning from the University of
New England, Australia. He was involved in the Gazelle Restoration Programme
in East New Britain as a member of the AusAID Team from 1997 to 2001.
Need to find effective ways to control
tax evasion
By CARLA MARCHESE
TAX evasion is a global scourge. The “black” economy has, by some estimates,
reached 10% of GDP in advanced countries and can top 70% in developing
countries. And it is getting worse.
Tax evasion is usually confronted in two ways: audits and harsh sanctions.
But, as the rising tide of tax evasion suggests, these mechanisms amount
only to a game of cat and mouse problem – and the mice, it seems, are
winning.
As tax evasion becomes more pervasive, whole networks to help hide incomes
have appeared, making it far less likely that those who break the law are
punished.
Moreover, because more people are evading taxes, tax administrations are
under increasing pressure to become more lenient or to accept bribes.
One strategy for weakening ties among potential evaders is to introduce
various conflicts of interests.
For example, value-added tax is designed to encourage firms to procure
invoices for their inputs in order to reduce their own tax outlays.
But the results often fall short of the potential benefits, because VAT has
helped inspire tax evaders to create even stronger networks that can hide an
entire chain of transactions.
The Chinese have devised a novel solution.
To encourage customers to request official receipts as proof of payment,
some local tax authorities issue a type of receipt that doubles as a lottery
ticket.
The receipts can be used as scratch cards to win small amounts of cash, but
they also serve as lottery tickets for winning larger amounts.
To prevent forgery, businesses must purchase special, patented machines for
printing these receipts.
Records of the printed receipts are automatically transmitted to the tax
authorities and are used to calculate taxes.
Similar systems are in use in Taiwan and Latin America.
Another way to reward consumers for combating tax evasion is to offer
subsidies.
Some developing countries have introduced a far-reaching VAT refund system
for consumers who collect official receipts.
Northern Cyprus, like Turkey, offers a 2.5 percentage point refund on VAT,
compared to the standard VAT rate of 13%.
But such systems are burdened by large administration and compliance costs.
The process of collecting and verifying claims is time-consuming, and the
net benefit for taxpayers is low.
Moreover, the method is vulnerable to illicit practices, such as collecting
receipts issued to foreigners and students, who cannot claim their own
refunds.
Monetary subsidies to consumption are also often granted in developed
countries for a variety of purposes, not least of which is fighting tax
evasion.
One such subsidy is permitting deduction of a fixed percentage of certain
expenses from income tax.
In Italy, expenditures for home improvements have been partly deductible for
the past 10 years, mainly to improve tax compliance by firms in the housing
sector.
New regulations have recently been introduced with the specific aim of
cracking down on moonlighting.
Under the 2007 financial law, those who claim the home improvement deduction
must supply an invoice from the building contractor, which must specify the
cost for labour.
In terms of reducing tax evasion, the results have been mixed. The bulk of
claims for the subsidy come from northern Italy, which is usually considered
less prone to tax evasion to begin with.
While some cases of illegitimate claims are under investigation, there is no
black market for receipts; fraud seems to arise mainly through falsified
invoices.
While econometric studies are not available, raw data show an increase in
reported income and in the number of firms and official workers.
However, taxable income in the sector is still growing at a slower rate than
gross income as measured by national accounts.
When tax evasion is extremely common, taxpayers are likely to experience
high transaction and psychological costs in resorting to tax auditors to
enforce the issuing of receipts.
But if consumers bear the brunt of costs for reporting violations to the
authorities, subsidies may induce them to seek out vendors willing to offer
legal transactions.
Yet these efforts are also costly. Whenever a firm chooses to evade, it
becomes increasingly difficult to find a vendor willing to engage in legal
transactions.
When alternatives become difficult to find, the compensation requested for
accepting an illegal transaction falls.
As typically happens in these cases, once a critical mass of tax evasion is
reached, it can jump to much larger values.
This process might also explain why, although many reward systems have
proven successful at the beginning, their benefits quickly fade.
Of course, there is a risk that subsidies and lotteries may diminish the
moral motivation of citizens to obey tax laws, because compliance becomes
conditional on some form of compensation.
But if lotteries, subsidies, and other devices fail to control tax evasion,
the Chinese have another method: the death penalty. – Project Syndicate
* Carla Marchese is Professor of Public Policy and Public Choice,
University of Eastern Piedmont, Italy.
|
 |
