Ghana Must Broaden Tax Base as Revenue Strategy Falls Short of Structural Goals — Prof Bokpin
Ghana’s domestic revenue reforms are yet to pass the country’s most important structural test, with the tax-to-GDP ratio remaining around 14% despite years of policy changes aimed at widening the tax base and reducing dependence on borrowing, according to economist Professor Godfred Bokpin.
The University of Ghana Business School economist argues that recent fiscal consolidation has produced greater macroeconomic stability, but the underlying revenue architecture remains too weak to support Ghana’s development ambitions sustainably.
His concern goes to the heart of Ghana’s post-crisis fiscal challenge: whether the country can raise enough domestic revenue to finance public services, infrastructure and development programmes without repeatedly relying on debt accumulation, expenditure compression or external financial support.
Ghana’s Medium-Term Revenue Strategy targets a tax-to-GDP ratio of between 18% and 20% by 2028, but Prof Bokpin says the current level of roughly 14% shows that reforms have yet to deliver the structural improvement needed.
Moving from 14% to 18% would require an increase of about 4.00 percentage points of GDP in tax revenue, while reaching the upper target of 20% would require a 6.00 percentage-point improvement.
That cannot easily be achieved through repeated increases in statutory tax rates alone.
Instead, Prof. Bokpin’s argument centres on deeper reforms to tax administration, compliance, enforcement and the structure of the economy itself.
He has repeatedly called for Ghana to intensify domestic revenue mobilisation by widening the tax net, closing loopholes, improving tax administration and reducing excessive dependence on volatile commodity revenues.
The distinction is significant because Ghana’s fiscal consolidation has so far relied heavily on expenditure restraint.
That can help reduce deficits quickly, particularly during an IMF-supported adjustment programme, but prolonged spending compression risks weakening public investment and constraining economic growth.
Bokpin has cautioned that relying primarily on expenditure cuts to achieve fiscal consolidation could eventually become counterproductive.
“If we rely primarily on the expenditure cut in fiscal consolidation, it will come back to bite us,” he said in May.
The implication is that sustainable consolidation must eventually shift from cutting expenditure towards increasing the state’s ability to collect revenue from a growing and productive economy.
That challenge becomes more urgent as Ghana moves beyond the emergency phase of its recent macroeconomic adjustment.
The government has signalled that fiscal consolidation will remain central through 2026, with spending expected to ease gradually from 2027. Prof Bokpin has described that policy consistency as reassuring because it provides businesses and investors with greater predictability.
But fiscal discipline on its own does not resolve Ghana’s structural revenue weakness.
A country with a narrow tax base can temporarily improve its deficit through expenditure reductions, yet still struggle to finance infrastructure, healthcare, education and social protection when spending pressures eventually return.
That is why the tax-to-GDP ratio has become such an important measure of reform success.
The government’s Medium-Term Revenue Strategy is intended to strengthen collections through policy and administrative changes, including reforms to Value Added Tax, compliance and tax administration.
Bokpin, however, has argued that the persistence of a roughly 14% ratio suggests those reforms have yet to translate into the required structural increase in domestic revenue.
The challenge also reflects the composition of Ghana’s economy.
A large informal sector, weak taxpayer identification, compliance gaps and the difficulty of effectively taxing some economic activities all constrain revenue mobilisation.
Attempts to resolve the problem through narrow transaction taxes can also create unintended economic consequences.
Bokpin recently cautioned government against treating Ghana’s rapidly expanding digital finance ecosystem primarily as a taxation platform, arguing that excessive emphasis on revenue extraction could discourage digital adoption and undermine broader economic gains.
“If you always put tax ahead of digitisation, the market will react differently,” he said.
That highlights the delicate balance facing policymakers.
Revenue mobilisation must increase, but poorly designed taxation can suppress investment, formalisation and economic activity — ultimately weakening the same tax base government is attempting to expand.
The more durable solution therefore lies in generating economic activity that is easier to identify, formalise and tax.
That links revenue reform directly to productivity and structural transformation.
Bokpin has consistently argued that Ghana’s recent macroeconomic stability should be treated as a foundation rather than an end in itself.
“From stability, the country must build resilience, and from resilience move toward structural and productivity transformation,” he said ahead of the 2026 Mid-Year Budget Review.
His argument is particularly relevant because stronger growth does not automatically translate into stronger government revenue.
Growth concentrated in lightly taxed, informal or capital-intensive activities can lift GDP without proportionately increasing tax receipts.
That means the quality and composition of growth matter as much as the headline expansion rate.
Ghana recorded real GDP growth of 6.40% in the first quarter of 2026, compared with 6.20% in the corresponding period of 2025, while inflation stood at 5.30% in June.
Those indicators point to a stronger macroeconomic environment, but they do not eliminate the structural fiscal problem identified by Bokpin.
The ultimate test of Ghana’s revenue reforms will therefore be whether the state can lift collections sustainably without repeatedly imposing distortionary taxes on a relatively narrow base.
Reaching the 18% to 20% tax-to-GDP target would give government significantly more fiscal space and reduce dependence on borrowing and external assistance.
Failure to achieve it would leave Ghana vulnerable to the same cycle that has repeatedly characterised its public finances: revenue underperformance, expenditure compression, rising borrowing requirements and eventual fiscal stress.
For Bokpin, that is why revenue mobilisation is no longer merely a tax-policy issue.
It has become a test of whether Ghana’s current economic stabilisation can be converted into durable fiscal resilience.
