A Tax-benefit Microsimulation Model makes its debut in Ghana
As Ghana builds up her social protection system and financing of public spending based on domestic tax revenues, a new tax-benefit microsimulation model has been developed and introduced into the country under the UNU-WIDER SOUTHMOD project, in collaboration with ISSER, University of Tampere and University of Essex.
The researchers are Prof Robert Osei of the Institute of Statistical, Social and Economic Research, ISSER, Prof Jukka Pirttila and Dr Pia Rattenhuber, UN-WIDER and Mr. Kwabena Adu-Ababio of ISSER. Collaborating institutions are the University of Essex and University of Tampere.
The Tax-Benefit Microsimulation Model combines representative household-level data on incomes and expenditure and detailed coding of tax and benefit legislation and has been proven to be an extremely useful tool for policy makers and researchers alike.
In this vein, understanding the system-wide impacts of different policy choices is critical important and tax-benefit microsimulation models are well suited for this purpose.
Speaking at a short ceremony to unveil the model, Dr Isaac Osei-Akoto, Head of Statistical Division at ISSER on behalf of the Director of ISSER, welcomed the collaborative effort and commended the team for their hard work which span about two years.
He noted that at a time government has undertaken some tax cuts it would be useful to find the implications for the various sectors of the economy.
Prof Osei gave an overview of the essence of the model in an era that has many social interventions. The model, he explained essentially enables analysis where one would be able to say what happens to poverty and inequalities with the soon-to-be rolled out free Senior High School Programme.
“The Microsimulation model gives a good guide to policy makers and useful handle to examine tax-benefit reforms” Prof Osei pointed out.
Prof Osei who is also the Vice Dean of the Graduate School, University of Ghana, observed that the model provides a holistic way of looking at fiscal and welfare impacts of benefits and taxes.
Touching on the importance of microsimulation, Dr Pia said it was to understand who pays how much taxes and who benefits, how taxes and benefits affect government budget as well as estimate effects.
Prof Jukka disclosed that the Microsimulation model (GHAMOD) was user-friendly interface and works transparently additionally when policy changes it could be changed as well. He took pains to explain what the model does not do.
The team of researchers commenced a two-day training programme at which participants would be introduced to GHAMOD and it works. Some of the participants are from the Ministry of Finance, National Development Planning Commission, GIZ (German Development Agency) and students from the Economics Department of the University of Ghana.