Ghana

Ghana’s tax revenue-to-GDP still lowest in sub-Sharan Africa - Economist

Business News of Thursday, 13 February 2020

Source: classfmonline.com

Professor Godfred Bokpin, Economist Professor Godfred Bokpin, Economist

Ghana’s tax revenue of 12.1% to GDP is still the lowest in sub-Saharan Africa.

This appears to be depriving the nation of the much-needed revenue to drive infrastructural development.

The nation needs not less than US$1.5 billion annually to bridge the gap.

Though the Ghana Revenue Authority (GRA) exceeded its revenue target of GHS43 billion for 2019, some economists believe more needs to be done to plug the loopholes in revenue mobilisation, particularly in the informal economy.

They want the government to widen the tax net further instead of overburdening existing businesses.

Economist and Finance Lecturer, Professor Godfred Bokpin, said: “What kind of target do we set for GRA? We just read recently that GRA exceeded its target; a country that is struggling to raise the much-needed tax revenue, and the GRA has exceeded their target. Fine. Maybe, they work so hard, maybe it’s also about time to look at what goes into the target set. Regardless they achieving their target, our tax efforts are still one of the lowest in sub-Saharan Africa.”

He continued: “I do agree with the challenges within the context the GRA is working, their efforts and all of that but it doesn’t send a good signal that you have exceeded your target. And, in fact, if you look at the variance, we can do better.

“The point that we are making is that Ghana can do far better, and this message we have sent it and have sent it across. The government, perhaps, might have done well to some extent but Ghana is growing far below its potential.”

The Ghana Revenue Authority (GRA) has been tasked to grow the contribution of tax revenue to the national economy from the 13.1% that was realised in 2018 to 15% this year.

The tax-to-GDP ratio in Ghana increased by 0.4 percentage points from 13.7% in 2016 to 14.1% in 2017.

Since 2000, the highest tax-to-GDP ratio in Ghana was 14.1% in 2017, with the lowest being 7.8% in 2000.