There has been very minimal progress in improving Ghana’s tax-to-GDP ratio over the past two decades, according to a recently published survey on the country’s tax system.
The survey, conducted by the Ministry of Finance, the Ghana Revenue Authority (GRA), and the UK’s Institute for Fiscal Studies reveals that despite the numerous efforts to enhance tax mobilization, the country was able to reach just 13.8% tax-to-GDP ratio as of 2022 using 2000 as the base year.
This 13.8%, according to the survey report, represents just a six percentage point increase in over 20 years.
The current tax-to-GDP ratio compares to the government’s target of 18-20% by 2027. With 3 years left to 2027, the country is struggling to raise tax revenues to meet this target.
The survey further revealed that the country has been struggling to improve the rate since 2017 as the ratio continues to fluctuate.
“At 13.8% in 2022, Ghana’s tax-to-GDP ratio remains below the government’s target of 18-20% by 2027. Though this ratio is almost 6 percentage points higher than in 2000, it continues to fluctuate and has made minimal gains since 2017,” portions of the survey read.
This poor performance leaves Ghana lagging behind its global peers. Among 28 lower-middle-income countries, Ghana ranked 16th in 2022 indicating the low revenue performance.
The findings further added that “Ghana’s tax-to-GDP ratio is fairly typical of countries in sub-Saharan Africa. However, considering countries of a similar income level across the world, Ghana’s tax revenue collections are slightly below average: out of 28 lower-middle-income countries with available data, Ghana ranked 16th in 2022.”
The slow growth in Ghana’s tax-to-GDP ratio, experts say poses serious concerns for Ghana’s economic development. As the government pushes to embark on ambitious projects in infrastructure, healthcare, and education, the current shortfall puts strain on these ambitions.
The inability to consistently grow the tax base could also limit the country’s fiscal flexibility, making it more vulnerable to economic shocks and global downturns.
The government must therefore pay particular attention to addressing the stagnation by implementing comprehensive reforms.
