Ghana’s government has been forced to rely on borrowing due to significant tax compliance failures by the Ghana Revenue Authority (GRA). Weak enforcement of tax laws has led to major budget shortfalls, with tax-related irregularities accounting for 90% of financial infractions during the 2021-2023 period. This was revealed by IMANI-OXFAM Fiscal Recklessness Index (2021-2023), despite claims by GRA that it has been meeting its target.
According to the report, tax-related irregularities accounted for 90% of the total financial infractions during the review period, marking a sharp increase from 65% in the previous assessment. These lapses in tax enforcement have forced the government to turn to borrowing to finance its operations, further straining public resources.
Despite efforts to improve tax compliance, the report reveals that the lack of rigorous enforcement mechanisms remains a critical obstacle. The GRA’s inability to enforce timely payment of taxes, combined with weak internal controls within Ministries, Departments, and Agencies (MDAs), has resulted in financial irregularities that could have been avoided with stronger oversight, the report added.
The report notes further that although Ghana’s public financial management laws provide clear penalties for financial misconduct, these are rarely applied, particularly in cases involving the Ministry of Finance, which has been identified as the most fiscally reckless institution during the review period.
According to the report, the Ministry was responsible for about 90% of the infractions, yet no significant sanctions were imposed for violations of procurement and tax laws.
The broader implications of these fiscal irregularities, the report noted extend beyond the country’s immediate budgetary concerns. Key social service programmes, such as the Livelihood Empowerment Against Poverty (LEAP) and the Ghana School Feeding Program (GSFP), have also been affected by financial mismanagement within the responsible MDAs.
These programmes, designed to assist the most vulnerable segments of society, have been compromised due to the misallocation of funds and weak internal audit controls, which hinder the efficient delivery of public services.
To address these persistent challenges, the IMANI-OXFAM report recommends the establishment of an independent fiscal council with the authority to oversee government financial decisions and enforce accountability. The report also calls for enhanced digitization of tax compliance systems, which could reduce human interference and improve efficiency in tax collection.
Moreover, the strengthening of internal audit functions across MDAs is critical to curbing the financial irregularities that have plagued the system.
