Ghana’s tax-to-GDP ratio remains low despite efforts to increase tax revenue through the integration of the Ghana Card with the Tax Identification Number (TIN). According to a survey conducted by the Ministry of Finance, the Ghana Revenue Authority (GRA), and the UK’s Institute for Fiscal Studies, Ghana’s tax-to-GDP ratio reached only 13.8% in 2022, based on the year 2000 as a baseline. This represents just a six percentage point increase in over two decades.
Although the integration of the Ghana Card may have expanded the tax base, it has not translated into an increase in tax collection. The Vice President, Dr. Mahamudu Bawumia, previously emphasized that using the Ghana Card as a tax identification number raised the percentage of adults with tax numbers from 4% to 85%. However, Deputy Finance Minister Dr. Alex Ampaabeng pointed out a couple of months ago that only 1.5 million out of the 7.9 million registered taxpayers (about 18%) are meeting their tax obligations.
This suggests that the tax base may have expanded to 85%, but it did not result in a corresponding increase in the number of people paying taxes. From the figures provided by the Deputy Finance Minister, only 18% of the 7.9 million registered taxpayers are fulfilling their tax obligations. This represents just 8.3% of Ghana’s adult population and roughly 8.67% of the total Ghana Cards issued.
Ghana’s tax-to-GDP ratio has historically been low compared to its peers, and analysts argue that simply issuing Ghana card number as TINs does not ensure increased tax payments as claimed by some people in authority. The government had set a target to raise the tax-to-GDP ratio to between 18% and 20% by 2027. However, estimates suggest that the tax-to-GDP ratio for the end of 2023 could be even lower at 13.4%. In 2022, Ghana ranked 16th out of 28 lower-middle-income countries in terms of tax-to-GDP performance.
Despite ongoing efforts to enhance tax mobilization, the results indicate that much work remains to achieve the government’s tax revenue targets and to effectively leverage the expanded tax base.
