The Threshold Program for São Tomé and Príncipe can be considered both a partial success and a missed opportunity. Over the course of the Program, personal income tax collection rose 150%, corporate taxes rose 197%, and import duties rose 136%. Total taxes rose 129%, short of the ambitious TCP goal of a 142% increase, owing mostly to weak performance on indirect taxes that were not a focus of the Program. With the advent of a new government, revenues took off in 2011 due to measures that could be attributed in part to the threshold program. As a result of the threshold program, the São Tomé tax administration has a new information technology infrastructure, staff and taxpayers were trained on the new tax laws, and auditors utilized optimized and transparent policies and procedures for conducting audits.
On the customs side, the Threshold Program also provided extensive improvement of the technology infrastructure, allowing the country to participate in the international standard ASYCUDA customs information system. Major domestic customs legislation was passed, and São Tomé and Príncipe joined the World Customs Organization in September of 2009.
The country implemented numerous legislative changes to reduce the red tape of business start-up, and created a “one stop shop” for business registration as a result of the threshold program. São Tomé and Príncipe rose from number 122 to number 105 on the International Finance Corporation’s rankings on ease of starting a business. Registration previously took 10 procedures, 144 days and 147% of income per capita. In the 2012 rankings (released at the end of 2011), São Tomé reduced registration to 4 procedures, 10 days, and 24.5% of income per capita.
How MCC Tracks Progress
MCC emphasized both achieving and measuring results in its threshold programs. During program development and the start of implementation, MCC worked closely with the Ministry of Public Finance, which coordinated program design on behalf of the Government of São Tomé and Príncipe, and with the U.S. Treasury Department, MCC’s on-the-ground representative. Both the U.S. Treasury Department and the Ministry of Public Finance contributed to establishing program milestones and refining program indicators for the São Tomé and Príncipe Threshold Program.