Professor of Finance at the University of Ghana (UG), Godfred Bokpin, has said Ghana’s current domestic revenue mobilisation (DRM) efforts are a threat to the post-pandemic recovery of the economy.
According to him, low tax revenue mobilisation coupled with rising expenditure and interest payments is affecting government’s ability to focus on priority projects to quicken and further enhance recovery from the pandemic.
“Ghana needs to build its tax revenue or reduce spending to obtain the resources needed to repay debts and interest commitments which is crowding out rather than crowding in priorities of government,” he stated.
Adding the imposition of new taxes on businesses by government is counter-productive and is likely to derail the full recovery of businesses in the post-pandemic era.
“The tax incidence on businesses and individuals should be far less burdensome, since increased taxes can have greater implications for inequality and be counter productive,” he averred.
Speaking at the IMANI-GIZ Dialogue Series themed Business Taxation and the Road to Ghana’s Post-COVID Economic Recovery, Prof Bokpin also noted that Ghana has the potential to raise around Ghs 104 billion in tax revenues from its various tax handles.
“Ghana’s theoretical tax frontier or tax potential across the various tax handles is estimated to be between 24-25%, approximately Ghs 104 billion instead of the current Ghs 54 billion or 14.3 percent of GDP,” he said.
“Currently Ghana’s peers with similar informality and economic structure are doing between 15- 20 tax revenue of GDP, which means raising between some Ghs 78 and Ghs 86 billion instead of the current Ghs 54 billion,” he added.
Further calling on government to build up its tax revenues not through increasing taxes on businesses and households but by rationalising its tax exemption regime, the use of digitalisation and other initiatives to improve tax compliance among others, to match that of its peers on the continent.
