Mertens Consults on VAT in Mozambique – Hobart and William Smith Colleges \
The HWS Update

Mertens Consults on VAT in Mozambique

Associate Professor of Economics Jo Beth Mertens traveled to Mozambique in May 2012 through the USAID funded Support Program for Economic and Enterprise Development (SPEED) to examine taxation issues in the agricultural sector of Mozambique.

According to the program outline, Mozambique’s agricultural sector represents roughly 25 percent of the national economy, while accounting for 75 percent of the labor force.  Poverty reduction in the country has stagnated since 2002 despite economic growth averaging seven percent since 1997.  A report completed in late 2011 uncovered potential issues in the way the Value Added Tax (VAT) deals with the agricultural sector. The SPEED office sought an expert in Value Added Tax (VAT) policy and contacted Mertens.

Mertens was excited to make the trek to Africa, where she saw an opportunity to assist farmers in the developing nation.  The ultimate objective of the program was “to investigate the Value-Added Tax application in the agriculture sector in Mozambique,” says Mertens. This issue is important because it affects competitiveness in the agricultural economy, and according to the programs’ objective statement, “quite often VAT payments can be turned into costs for companies.”

While in Africa, Mertens says she was able to “discover a problem that affects many farmers that can be easily solved without revenue damage to the government.” Mertens explains that for farmers in Mozambique, “tax rules made it too costly for processors to buy output from local farmers. It was becoming cheaper to import than to buy local production.”  

While there, Mertens was able to travel to Nampula in the north and Beira, a port city in the middle of the country, where she met with millers, cashew exporters and other agencies working in agriculture.  “It’s a beautiful place! There are lots of smart, dedicated people working  on economic development.”  Mertens’ analysis will be used to develop a workshop on these issues for stakeholders in both the private and public sectors, resulting in tax policy recommendations for the government.

Mertens also has served as a consultant to several countries, including Guyana and Kosovo. She has served the U.S. Treasury Department as senior tax adviser to the Federation of Bosnia and Herzegovina, and has presided over similar projects in Kazakhstan, Lithuania, Russia, the Ukraine and Nigeria.  She has been a consultant for the World Bank and the International Monetary Fund.  She holds a bachelor’s degree from the University of Arkansas, a master’s degree from Duke University and a Ph.D. from Emory University.

She joined HWS in 1997.

In the photo above, Associate Professor Jo Beth Mertens stands beside the statue of Dr. Elizabeth Blackwell on the Hobart Quadrangle.