Professor calls for science and data based policies to address Ghana’s revenue woes
Professor William Baah-Boateng, an economist and Head of the Economics Department at the University of Ghana, has expressed concern about the country’s revenue mobilisation, warning that Ghana may struggle with revenue collection if proper measures are not put in place.
Speaking on PM Express on Thursday, he lamented the lack of appropriate strategy to address the challenges faced by successive governments in tackling revenue leakages across all sectors.
According to the professor, there is a need for a more robust system to address these issues, rather than expanding the tax net. “I think we will continue to battle with revenue collection. We keep expanding the tax net, yet we are not getting what we want, which means we are not doing something right. We see government agencies collecting taxes yet we see less of these amounts for developmental projects,” he said.
The professor also called on the government to implement policies based on science and data, rather than making hasty decisions due to crises that will crowd out the private sector. He emphasised the need for effective policies, stating that “We have a lot of policies that seem to be ineffective”.
Widening the domestic tax base of the economy has been a subject of attention for successive governments in most parts of the world. As a result, Ghana has made numerous efforts to mobilise tax revenue to fund developmental, social, recurring, and interventional projects over the years. These efforts have been dear to governments, as they seek to achieve fiscal consolidation and higher tax revenue to Gross Domestic Product (GDP) ratio.
Despite these efforts, revenue mobilisation remains a major challenge for Ghana. The country has struggled with tax collection for many years, with tax revenue to GDP ratio hovering around 12% over the past decade, significantly lower than the Sub-Saharan African average of 17%. The government has, in recent years, introduced a number of measures to improve revenue collection, including the implementation of the Tax Identification Number (TIN) system, the introduction of an electronic platform for tax payment, and the establishment of a revenue collection taskforce.
However, these measures have not yielded the desired results, as the country continues to struggle with tax compliance and revenue mobilisation. Ghana’s tax system is still characterised by widespread evasion and avoidance, a lack of effective enforcement, and weak institutional capacity. These factors have contributed to revenue leakages and undermined the government’s efforts to mobilise revenue to fund developmental projects.
To address these challenges, the government needs to adopt a more comprehensive approach to revenue mobilisation that goes beyond expanding the tax net. This will require the implementation of measures to address the root causes of tax evasion and avoidance, such as improving tax administration and enforcement, strengthening institutional capacity, and enhancing public awareness of the importance of tax compliance.
The challenges of revenue mobilisation in Ghana cannot be underestimated, and urgent action is required to address the underlying causes of the problem. The government needs to adopt a more comprehensive approach to revenue mobilisation that is based on science, data, and effective policies. By doing so, Ghana can achieve fiscal consolidation, higher tax revenue to GDP ratio, and fund developmental projects that will drive economic growth and improve the standard of living for its citizens.
