Over 15 Tax Handles And Adjustments Introduced Post-COVID-19, Says Prof. Bokpin
Economist and Professor of Finance at the University of Ghana Business School, Prof. Godfred Bokpin, has raised concerns over Ghana’s taxation approach, labeling it as overly complex and ineffective in boosting revenue.
Speaking during the NorvanReports and Economic Governance Platform X Space discussion on the topic “Fiscal Sustainability Amid Tax Cuts and Manifesto Promises,” Prof. Bokpin highlighted that Ghana introduced over 15 tax handles and adjustments post-COVID-19, including the e-levy and COVID-19 health levy.
However, these measures, he argued, have failed to enhance tax buoyancy or significantly raise the tax-to-GDP ratio.
“when it comes to the taxes, if you look at it from post-COVID, there have been over 15 different tax handles and tax adjustments in Ghana alone, and in fact, it is the highest in the whole of Africa in terms of the additional taxes and the rate adjustments. But if you look at the period that we’ve had all these taxes, it has necessarily not improved the buoyancy of our tax system,” he intimated.
Excessive Tax Handles Undermining Revenue
According to Prof. Bokpin, the proliferation of tax handles in Ghana’s relatively small economy has created substitution effects, where new taxes simply replace rather than add to revenue streams.
“Despite all these new taxes and adjustments, our tax-to-GDP ratio hasn’t improved the way one would expect, and the increase in tax buoyancy is negligible,” he said.
He emphasized that additional taxes, including the e-levy, have not delivered substantial revenue, citing data that shows minimal returns relative to GDP.
Compliance Costs Straining Businesses
Prof. Bokpin also spotlighted the mounting compliance costs imposed on businesses due to frequent tax adjustments. Financial institutions, he noted, have had to reconfigure systems repeatedly to accommodate new tax measures, including the e-levy.
“Since COVID, businesses have been reconfiguring their systems almost every six months just to remain tax compliant. The cost of compliance is becoming unbearable,” he explained.
The Case Against the E-Levy
The economist argued that eliminating the e-levy could boost mobile money (MoMo) transactions and promote economic formality. He observed a decline in MoMo transactions and a resurgence of checkbook and cash-based transactions, which were previously diminishing.
“Eliminating the e-levy would increase MoMo turnover, enhance the profitability of telcos, and ultimately raise tax revenues. It would also enable greater financial inclusivity,” Prof. Bokpin asserted.
He concluded that Ghana needs a streamlined tax system that focuses on fewer, more effective tax handles while reducing the burden on businesses and citizens.
