Institute of Economic Affairs (IEA) has bemoaned the inability of Ghana to mobilize the requisite revenue needed for the socio-economic development of the country.
It said the country needed to increase its revenue effort by widening the tax net and plugging the numerous loopholes.
The Director of Research of the organization John Kwakye, , said revenue mobilization still remains a serious challenge in Ghana, however adding that this challenge is not totally unsurmountable.
He said, “We only have to do things a bit differently, as continuing to do the same things would not give us different results.”
Dr. Kwakye noted that the revenue and total revenue projections for 2021 according to him are about Ghc 56 billion (US$9.7 billion) and Ghc72 billion (US$12.4 billion) respectively, describing the projected figures as peanuts.
Speaking at a news conference on IEA’s position on the mid-year review of the 2021 budget presented to Parliament by Mr. Ken Ofori-Atta, the Minister of Finance in Accra, he said in Gross Domestic Product (GDP) terms, the tax and total revenues are 12.7% and 16.5% respectively.
These ratios, he said, compare unfavorably with Ghana’s middle-income peers’ average of 25% and 30%, noting that Ghana’s personal income, corporate income, and indirect tax rates are relatively high.
He therefore, said Ghana’s low revenue effort is not due to the fact that the country’s tax rates are low but rather failure on the part of the responsible agency to collect a lot of taxes.
Ghana, he stated, loses revenue in excess of Ghc 5 billion or about US$1 billion annually through tax exemptions which he believes is due to abuse of the initiative.
Government according to him introduced a bill to streamline the exemptions, but it has been languishing in Parliament since 2019, adding that the political will to pass the bill, seems to be lacking, ostensibly due to entrenched interests.
He called on Parliament to expedite actions in passing the bill into law to help plug holes in the tax system.
