Ghana’s corporate tax gap equivalent to 12.7% of GDP, says Dr Ali-Nakyea
Ghana’s economy has been experiencing steady growth in recent years, but the country still faces significant challenges when it comes to raising enough revenue to finance its development. According to Dr Ali-Nakyea, a leading economist and tax expert, the total corporate tax gap in the country is estimated to be a staggering 85.6% of potential tax revenue, equivalent to 12.7% of GDP. This represents a significant amount of money that could be used to finance much-needed infrastructure and social development projects across the country.
The situation is even more dire when one considers that excluding manufacturing companies located in Tema and the free zone areas, the potential revenue loss represents 81.6% of potential revenue, equivalent to 9.4% of GDP. This highlights a significant issue with tax compliance in the country, particularly among corporations.
Dr Ali-Nakyea also noted that the VAT gap is currently estimated to be 39.3%, while the import duty tax gap is 32.5%. These figures demonstrate that there is a pressing need for greater efficiency and effectiveness in the administration and collection of taxes in Ghana. The government must explore all possible avenues to close these gaps and ensure that all taxpayers, including those in the informal sector, pay their fair share of taxes.
As Dr Ali-Nakyea points out, it is essential that the government raises enough revenue domestically to finance its development agenda without overburdening taxpayers. While exploring non-tax sources of revenue may be one way to achieve this, it is crucial to close the tax gaps rather than introducing new taxes. The government must ensure that the tax system is efficient and effective, and that all taxpayers are compliant with tax regulations.
The challenge of raising enough revenue in Ghana is not only related to tax compliance. There are also issues related to blocking loopholes and ensuring the prudent management of public finances. The government must take a coordinated approach to address these challenges. It will require the active involvement of all stakeholders, including the government, tax authorities, and taxpayers themselves.
The issue of raising enough revenue to finance development in Ghana is complex and multifaceted. It requires a strategic and coordinated approach, focused on closing the significant tax gaps and ensuring efficient and effective tax administration and collection. The government must also explore non-tax sources of revenue, block loopholes, and manage public finances prudently. Only by taking these measures can Ghana hope to achieve sustainable economic growth and development in the long term.
