Low Tax Compliance, Not New Taxes, Is Ghana’s Biggest Revenue Problem – Economist
Economist Emmanuel Amoah Darkwa has said that, Ghana’s persistent struggle to meet its revenue targets is driven more by low tax compliance than by a shortage of taxes.
Speaking via Zoom on Kessben TV’s Digest show, Mr. Darkwa argued that Ghana already has enough tax handles, but successive governments have focused on introducing and abolishing taxes instead of expanding the country’s tax base.
He noted that the New Patriotic Party (NPP) administration scrapped several taxes introduced by the previous National Democratic Congress (NDC) government after taking office in 2017, while the current government has also removed some taxes introduced by its predecessor. Despite these policy changes, he said, revenue generation has seen little improvement because the tax net has not been widened.
According to Mr. Darkwa, Ghana continues to depend on “low-hanging fruit” for revenue collection instead of bringing more taxpayers into the system.
He identified low tax compliance as the biggest obstacle to meeting the country’s revenue targets and urged authorities to strengthen efforts to capture more workers in the informal sector under the personal income tax system. He also called for improved collection of property rates, describing both measures as key to boosting domestic revenue.
He explained that Ghana is a lower -middle income country that as compared to our peers we should be doing about 23% to GDP in terms of taxes but we doing just a little above 18-19% , so there is more room for improvement in terms of increasing our tax revenue.
Moreover, the economist asserted, we must sensitize the people of the need to pay taxes and the benefits thereof. Other countries pay more taxes than what we do but they understand the need the need so it does not worry them. If government could use politics to educate citizens on what they seek to benefit, they will freely pay.
By Mercy Asane Baah
