Ghana losing billions to weak tax system – Finance Minister demands swift policy reforms

Ghana’s tax revenue remains among the lowest in the region, posing a major challenge to economic growth, Finance Minister Dr Cassiel Ato Forson has cautioned.

Speaking at the National Economic Dialogue (NED) 2025 in Accra on Monday, March 3, 2025, Dr Forson revealed that the country’s tax-to-GDP ratio stands at just 13.5 per cent, well below the average for economies of similar size.

 He attributed this to excessive tax exemptions, inefficiencies in tax administration, and low compliance levels.

“The VAT gap is massive,” he stated, disclosing that the Ghana Revenue Authority (GRA) had targeted a 32 per cent increase in VAT collections for 2024 but achieved only 17 per cent, a figure that fell below inflation levels.

Dr Forson further noted that tax exemptions on VAT, personal income tax (PIT), and import duties cost Ghana approximately 3.9 per cent of GDP annually, excluding corporate tax exemptions.

He pointed out that the VAT exemption on dwellings and land alone accounts for 33 per cent of total tax exemptions granted.

He called for urgent reforms in VAT administration, a reduction in exemptions, and improved tax collection measures to boost domestic revenue.

He warned that without swift action, Ghana would struggle to finance its development agenda without relying on external borrowing.