- Ghana’s tax problem is weak management, not weak revenue collection – a tax expert says
Every Ghanaian pays tax, whether they recognise it or not. Professor Abdallah Ali-Nakyea delivers a blunt message: Ghana’s fiscal problem stems not from a lack of taxes, but from weak compliance, inconsistent enforcement, and fragile public confidence in revenue use.
Speaking on the Legal Social Podcast, the tax policy expert challenged a familiar public assumption that large parts of the population somehow sit outside the tax net. In practice, he said, taxation is embedded so deeply in daily life that avoidance is almost impossible.
“Unless you want to walk around naked or stop eating entirely, you cannot avoid paying taxes,” he said.
His point is more significant than it first appears. In Ghana’s tax debate, the public conversation often centres on whether people are paying enough. Professor Abdallah’s argument shifts the focus to a more uncomfortable question: if almost everyone is already paying in one form or another, why does the state still struggle to turn that contribution into visible development and fiscal confidence?
He explained that Ghana’s tax system works through two broad channels: direct and indirect taxes. Direct taxes include income-based deductions such as Pay-As-You-Earn, corporate tax and property tax. Indirect taxes, by contrast, are woven into the prices of ordinary goods and services.
“When you buy food, clothes, fuel, or even pay for transport, taxes are already included in the price,” he said.
That observation matters because it broadens the idea of tax citizenship. In a country where formal payroll taxation tends to dominate public discussion, the reality is that informal workers, low-income consumers, and even those outside regular wage employment are still participating in the tax system through consumption. The question, then, is not simply who pays. It is who sees value in what is paid.
Professor Abdallah also pushed back against the semantic distinctions that often cloud public understanding of fiscal charges. In his view, the difference between taxes, levies, and fees is often more political than substantive when the payment is compulsory, state-imposed, and intended for public use.
“If it walks like a duck and quacks like a duck, then it is a tax, regardless of whether you call it a levy or a fee,” he said. He went further, noting that even gifts are taxable under Ghanaian law and should be declared through self-assessment. “It is your constitutional duty to declare all your earnings, including gifts, and pay the appropriate tax,” he said.
That legal position may strike many citizens as surprising, but it serves a larger purpose in his argument: Ghana’s tax base is broader than public perception admits. The deeper weaknesses lie elsewhere.
That is where his critique turns sharper. According to Professor Abdallah, Ghana’s real fiscal distress is not the result of an inherently poor country, but of a poorly managed one. “Ghana is not poor. It is only poorly managed,” he said.
This line should trouble policymakers most, as it reframes the tax debate from extraction to stewardship. Even if low revenue is the problem, pressure for more taxes or more aggressive collection on its own cannot solve the legitimacy crisis around public finance. Citizens resist taxation not because they reject contributing to the state, but because they suspect the state mismanages those contributions.
Professor Abdallah argued that salaries and wages already absorb much of the revenue collected, leaving little room for capital expenditure and development spending. We cannot even generate enough revenue to pay salaries and wages. Very little is left for development,” he said.
That assessment is central to Ghana’s fiscal structure. A state that spends heavily on recurrent obligations but struggles to invest visibly in roads, schools, hospitals and water systems risks creating a dangerous cycle: citizens pay, but do not see transformation; because they do not see transformation, trust erodes; because trust erodes, compliance weakens; and because compliance weakens, the state leans harder on the already compliant.
He also cited payroll leakages, including “ghost names”, as a major drain on public resources. “When people hear about corruption, they begin to question why they should pay taxes at all,” he said.
That is perhaps the most politically important point in his intervention. Tax is not only an economic instrument; it is a moral contract between citizen and state. Once corruption, leakages, and weak accountability dominate the public imagination, taxation begins to feel less like a civic contribution and more like an involuntary surrender.
His warning on borrowing was equally direct. “Borrowing is postponed taxation. If you borrow today, you will tax your citizens tomorrow to repay it,” he said. That line deserves particular attention in Ghana’s context. For years, public borrowing has often been treated as a way to soften present fiscal pain. Professor Abdallah’s framing strips away that illusion. Debt does not remove the tax burden; it merely delays it, often at a higher political and social cost.
On compliance, he said some businesses collect taxes from customers but fail to remit them to the state, citing the common practice of offering to waive VAT if customers agree not to demand official invoices. “The problem is not overtaxation; it is compliance and enforcement,” he said.
That diagnosis is both simple and uncomfortable. Ghana’s revenue challenge may be less about designing ever more creative tax handles than about making the existing system work as intended. In that sense, enforcement is not merely a technical issue; it is the difference between a nominal tax system and a functioning one.
He nevertheless insisted that taxation should not be framed as punishment, but as the core mechanism through which a society finances itself and manages economic behaviour. “Governments do not do business, yet they must provide infrastructure: roads, hospitals, schools, and water. Taxes are how citizens contribute to make that possible,” he said.
He added that taxes are also a policy instrument, not just a revenue source. Governments use them to contain inflation, discourage harmful consumption, protect local industry, and stimulate investment when production weakens. “When there is too much money chasing too few goods, government increases taxes to reduce spending. When production is low, taxes are reduced to encourage investment and job creation,” he said.
And in perhaps the most concise summary of his broader argument, he said: “Taxation is not just about collection. It is a policy tool to guide economic direction, protect citizens, and build the nation.”
The deeper challenge for Ghana, then, is not whether tax should be paid. On Professor Abdallah’s reading, that question is already settled: everyone pays in some form. The real issue is whether the state can build a system in which compliance is enforced fairly, revenue is managed credibly, and public spending is visible enough to restore trust. Until that happens, the politics of taxation in Ghana will remain trapped in a paradox. Citizens will continue to fund the state often invisibly, through every purchase and every journey, while still feeling, not unreasonably, that the state they are funding is not yet working well enough in return.
