Chairperson of the Ghana Revenue Authority (GRA), Emeritus Professor Stephen Adei, has said government at the commencement and completion of every fiscal year has zero monies to its credit.
This, according to him, is premised in the fact that all expenses made by government in a fiscal year is supported by borrowings made since mobilized revenue is insufficient to cater for government’s expenditure in any given fiscal year.
“Our debt keeps ballooning because people think government has some money somewhere, but actually at the beginning and end of the year government has zero monies. Every money to spent within the year comes from taxes or borrowings,” he stated.
Making the assertion on the back of the Afrobarometer’s findings which indicate that Ghanaians are willing to pay more taxes to finance development in an interview on Joy News’ AM Show and monitored by norvanreports, Prof Adei opined that the only way government can stop borrowing and have more monies to execute planned programmes is when Ghanaians pay more taxes.
“If you continue borrowing, you become worse off, so the only way out is for Ghanaians to pay more. But that cannot be by increasing the level of taxation all the time but spreading the tax net and making sure that we have effective tax systems. But the fact remains that every country must pay its way out of debts and development and that’s why I like the findings of the Afrobarometer report,” he posited.
Speaking further in the interview, Prof Adei noted that although the Ghana Card is capable of helping address some shortfalls in tax collection in the country, he asserted that the Ghana Card should not be seen by tax authorities and government as the only solution to the country’s tax problems.
“There is more to the Ghana card, there is enforcement, identification and other things so we should not think that this identification card by itself will solve all the problems we have, because we should be having 20 percent of our GDP in taxes so that we can finance our development from within but now we are doing around 13 percent,” he noted.
According to the Finance Ministry, 35 percent of total revenues are earmarked for debt service payments. The remaining 65 percent of total revenues are used to settle interest payments and compensations which in most cases is insufficient hence government has to borrow to fully pay interests and compensations.
Government has to further borrow to finance its agencies and undertake planned developmental projects for the year.
This has resulted in the steady rise in the country’s debt stock with the total debt stock amounting to Ghs 291 billion (76.1 percent of GDP) at end-December 2020.
