Prof Bokpin wants 2024 budget to address Ghana’s anti-growth tax environment
Professor Godfred Bokpin, has called on the government to undertake a thorough review of the country’s tax environment in the upcoming 2024 budget statement. In his expert assessment, the current tax regime burdening businesses with excessive taxes is unsustainable and obstructive to the growth of businesses.
“We have configured our tax strategy and tax environment in a manner that is anti-growth and anti-business. And with that, there’s no way we can progress as a country,” he opined.
Emphasizing the significance of the private sector as the driving force for job creation and economic expansion, Professor Bokpin urges the government to tailor its tax strategy to mirror the business model of the private sector.
Highlighting the potential pitfalls of the existing tax structure, he draws attention to the surfeit of consumption-based taxes, which he believes add undue strain to businesses and hinder overall progress. Consequently, he recommends merging the Standard VAT rate, currently standing at 15%, with the straight levies which total 6%, and reducing the combined rate to below 18%.
His analysis posits that a Standard VAT rate exceeding 17% would be counterproductive, exacerbating inequality and poverty.
In addition, Professor Bokpin cautions against an overreliance on indirect-based taxes, as it may not yield optimal results in poverty reduction and narrowing income disparities.
“So the taxes are just too many. There is no way we can tax our way out of poverty. So that is something I think government should look at in the 2024 budget and specifically is to look at consumption-based taxes. There are too many of them.”
“If your Standard VAT rate is more than 17%, any additional increase in that standard rate is counterproductive and it worsens inequality and poverty. And also there are too many indirect-based taxes and if your tax structure is heavily driven by indirect taxes, that largely is not good for poverty reduction, and is not good for narrowing inequality,” he quipped speaking during the Graphic Business Twitter Dialogue Series on the 2023 Mid-Year Budget Review.
To offset any potential revenue shortfalls resulting from the proposed tax rate merger, Professor Bokpin suggests enhancing administrative and compliance measures by the GRA. The enhancement of GRA’s E-VAT invoice system and digitization of tax records could bolster tax collection efficiency.
The proposed reassessment of tax policies by Professor Bokpin is aimed at fostering an environment that nurtures sustainable growth, supports private sector businesses, and contributes to the overall prosperity of the nation. A well-balanced and streamlined tax structure, responsive to the needs of businesses and citizens alike, will be a key determinant in shaping Ghana’s economic future.
