Lead partner at PFM Tax Africa and erstwhile Minister for Finance, Seth Terkper, has expressed doubt over government’s ability to rake in a targeted amount of Ghs 74.2 billion (approximately 17 per cent of GDP) as tax revenues for this year.
In an interview monitored by norvanreports, Mr Terkper who is a tax expert posits that government’s goal of achieving a tax revenue target of 16.7 per cent to GDP is nearly impossible given the country’s inability to even achieve a 13 percentage points tax revenue to GDP for some years now, coupled with an economic downturn currently being suffered by the country due to the adverse impact of the Covid pandemic.
In addition, Mr Terkper posits that it takes a country a minimum of three to four years to achieve a 3 percentage points increment in tax revenue mobilization to GDP.
“The highest percentage of tax revenue to GDP I think is 13% when you consider the rebasing done in 2014 and since then we have been hovering around 12% which is even lower than the 13%. And so if all of a sudden we want to achieve 17% of tax revenue to GDP then that becomes surprising because it’s takes countries 3 to 4 years to achieve 3% increment in tax revenue,” he asserted.
“We have never been able to achieve above 13% tax revenue to GDP even in good times and now that we are in an economic downturn we want to achieve that, its nearly impossible. Well, unless we discover another oil field and get royalties from it or an external factor ramps up crude oil prices to $100 per barrel like we saw sometime ago then that can happen,” Mr Terkper added.
Caretaker Finance Minister Osei Kyei Mensa-Bonsu, in the presentation of the 2021 Budget Statement to Parliament, intimated projected total revenue and grants by government for 2021 is GH¢72,452 million equivalent to 16.7 percent of GDP up from an outturn of GH¢55,132 million equivalent to 14.3 percent of GDP recorded in 2020.
Domestic revenue, Caretaker Finance Minister Osei Kyei Mensa-Bonsu, further pointed out is estimated at GH¢70,987 million in 2021 and represents an annual growth of 31.7 percent over the recorded outturn for 2020. Of the total domestic revenue, non-oil tax revenue will constitute about 74 percent and amount to GH¢53,632 million, equivalent to 12.4 percent of GDP, reflecting the impact of expected improvements in tax compliance and reforms in revenue administration.
Speaking further in the interview, Mr Terkper posited that putting aside the set tax revenue target for this year, government failed to properly lay out in the budget how it intends to achieve the tax revenue target.
“Government said it is going to achieve the set target through improvements in tax administration and the use of the Ghana Card, but the processes which government is going to use were not outlined in the budget, as to what will be done to improve tax filing and payments, what is going to be done to strengthen audits and investigations, how to retrieve monies from those owing among others were not given,” he remarked.
