International Civil Society Organization, ActionAid, has noted that a 5 per cent increment in Ghana’s tax-to-GDP ratio, will result in a $1.5 billion support for the education sector alone.
In its new report, ActionAid, states that the 5 per cent in tax-to-GDP ratio could in total, rake in for Government some $7.8 billion additional revenue by 2023.
“A 5-percentage-point increase in the tax-to-GDP ratio would lead to about $7.8 billion in additional revenue by 2023, and if the government allocates just 20 per cent of this extra revenue to education, as international benchmarks require, this could increase the sector’s budget by $1.5 billion, nearly 60 per cent of the 2019 education budget,” read an excerpt of the statement.
“Ghana requires new public funds to meet the sustained costs required to meet SDG4 over the long term. Yet, in a time of increasing fiscal pressures on the budget, this will become ever more difficult. This means raising new revenues has become increasingly important,” the report further read.
According to ActionAid, Ghana relies heavily on tax revenue as a key source of domestic revenue mobilization, but is not currently collecting as much revenue as it should.
“It is increasingly important for Ghana to increase taxes, given the fact that, debt servicing is sucking away precious revenues,” it said.
According to the report, Ghana between the period of 2007 and 2017, did too little to improve its tax-to-GDP ratio.
It however added that the country reduced reliance on indirect taxes as against direct taxes during the same period, suggesting that the tax system has become increasingly progressive.
The report also noted that Government spending on education has been shown to be progressive due to a high share of public spending on pre-primary, primary, and junior high school education.
