Strategies for boosting Ghana’s revenue without introducing new taxes

Ghana’s newly appointed Finance Minister, Dr Cassiel Ato Forson, faces a significant challenge: increasing the country's tax-to-GDP ratio from 13.8 per cent to 16 per cent – 18 per cent while adhering to his commitment to abolish 'nuisance taxes' such as the E-levy and betting tax. 

Achieving this ambitious goal without introducing new taxes will require a strategic focus on improving tax compliance, broadening the tax base, and enhancing the efficiency of existing tax systems.

These key strategies, if successfully implemented, can significantly boost Ghana's revenue without burdening citizens with additional taxes, paving the way for a more prosperous future.

Enhancing tax compliance

Improving tax compliance is a low-hanging fruit for increasing revenue. Ghana loses substantial revenue annually due to tax evasion and avoidance. The following measures can help address this:

• Digitisation of tax systems: Building on the Ghana Revenue Authority’s (GRA) efforts, expanding the digitisation of tax administration can minimise loopholes, reduce manual errors, and curb corruption. Introducing user-friendly tax filing and payment platforms will encourage compliance among individuals and businesses.

• Strengthening enforcement mechanisms: Deploying advanced data analytics and artificial intelligence (AI) to identify non-compliant taxpayers can enhance enforcement. To serve as a deterrent, this should be coupled with stricter penalties for tax evasion.

• Public education campaigns: Educating citizens on their tax obligations and how their contributions are used to fund public goods can foster voluntary compliance. Transparency in the allocation of tax revenues will build trust in the system.

Broadening tax base

Expanding the tax base rather than introducing new taxes ensures more economic activities and participants are brought into the tax net. Dr Forson can achieve this through:

• Formalising the Informal Sector: Ghana's informal sector constitutes a significant portion of the economy but remains largely untaxed. Simplified tax schemes tailored to small and micro-enterprises and incentives for formalisation can bring these businesses into the tax net.  

• Property tax reforms: Property taxes remain underutilised in Ghana. Conducting a nationwide property valuation exercise and updating property registries can significantly boost revenues. Implementing a fair and efficient collection system is key.

• Taxing underserved sectors: Certain lucrative sectors, such as self-employed professionals (lawyers, medical doctors, accountants, architects, etc), real estate and mining, may have untapped revenue potential. Conducting sectoral assessments can reveal opportunities for optimised taxation.

 Plugging revenue leakages

Revenue leakages through corruption, inefficiency and mismanagement undermine the country’s revenue mobilisation efforts. To address this:

• Implementing robust audit mechanisms: Regular audits of tax collection processes can identify and eliminate leakages. Empowering internal audit units and the Auditor-General’s office will enhance oversight.

• Curbing Illicit Financial Flows (IFFs): Strengthening border controls and monitoring trade misinvoicing can reduce IFFs and ensure that taxable economic activities are captured.

• Improving public financial management: Ensuring that collected revenues are efficiently utilised can minimise waste and enhance public confidence in the system, indirectly supporting compliance.

Leveraging technology, data

Innovative use of technology can revolutionise tax administration. Dr Forson can consider:

• Integrating Taxpayer Data: Establishing a centralised database linking tax records with national identification systems can improve monitoring and reduce underreporting.

• Promoting Cashless Transactions: Encouraging electronic payments in both public and private sectors can increase traceability and reduce opportunities for under-the-table transactions.

Encouraging Public-Private Partnerships (PPPs)

Dr Forson can explore PPPs to finance critical infrastructure projects and reduce the government's fiscal burden.

By partnering private entities, the government can leverage external expertise and resources to achieve development goals without heavy reliance on tax revenues, opening up new avenues for economic growth and prosperity.

Reviewing, rationalising tax incentives

Ghana's tax incentive regime should be carefully reviewed to ensure exemptions and holidays are granted only when they clearly benefit the economy. Phasing out redundant incentives can recoup significant revenue while maintaining investor confidence.

Promoting economic growth

Finally, fostering robust economic growth is a sustainable way to increase revenue. A growing economy expands the tax base organically. The government can prioritise policies that:

• Stimulate local industries and entrepreneurship.

• Enhance export competitiveness.

• Attract foreign direct investment (FDI) in productive sectors.

Conclusion

Dr Forson’s vision of raising Ghana’s tax-to-GDP ratio to 16 to 18 per cent without increasing taxes is achievable through strategic reforms focused on compliance, efficiency and equity.

By harnessing technology, addressing leakages and broadening the tax base, Ghana can mobilise sufficient resources to meet its development goals, while maintaining the trust and confidence of its citizens.

If implemented effectively, these measures will position Ghana as a model for sustainable revenue mobilisation in Africa.

The writer is a lawyer/chartered accountant specialising in tax law and policy.

E-mail: salahu222@yahoo.com