Senior Advisor to President Nana Akufo-Addo, Yaw Osafo-Maafo, has said that every developed country develops largely on taxes contributed by its citizens.
Speaking on behalf of the President, Mr. Osafo-Maafo lamented that Ghana is unable to see much development because a small number of citizens from the formal sector pay taxes, which is inadequate to pursue the government’s developmental agenda.
He made this remark on Wednesday during the 11th Annual International Tax Conference organised by the Chartered Institute of Taxation Ghana (CITG) at the Accra International Conference Centre.
Speaking on the topic “Taxation and Economic Development: A Review of Ghana’s Tax Policies,” the former Minister disclosed that COVID-19 and the Russian-Ukraine War forced the Ghanaian government to implement some tax reforms in order to help the nation’s fortunes turn around.
“Government thus undertook some major reforms to help turn around our fortunes, and with a view to fostering lasting fiscal discipline, we took some necessary measures in advancing reforms to enhance domestic revenue mobilization and strengthen public and financial management,” he stated.
Mr. Osafo-Maafo commended the Ghana Revenue Authority (GRA) for doing their best in tax mobilization by achieving a tax-to-GDP ratio of 14% and urged them to target about 18% of GDP in the coming year.
“Certainly GRA is doing its best, and it will continue to improve so that we get to that league where we will lift ourselves from 14 percent of GDP to about an average of 18 percent,” he added.
He said that most developed economies rely on internally generated tax for development, whereas in Ghana, an insignificant proportion of the population pays tax.
He, accordingly, charged the CITG to come up with recommendations on how the government can tax the informal sector to augment what it gets from formal sector tax collection to undertake major developmental projects across the country.
He also promised to do everything in his power to get the Institute a large plot of land on which to build their office complex.
Speaking on the same platform, a senior research fellow at the Institute of Statistical, Social, and Economic Research (ISSER) of the University of Ghana, Professor Charles Ackah, outlined some of the means by which the government can make more money to develop the country.
Prof. Ackah recommended that the government do away with the regressive tax system it is using, where the poor pay much more than the rich. He urged the government to pursue a progressive tax system, which he believes is sustainable.
He also advised the government to rope in the informal sector into the tax net as much as possible since most of them earn so much but pay little or no tax.
Prof. Ackah additionally observed property taxes as a good revenue source. He advised the government not to be deterred by the opposition it may encounter in implementing the tax.
He finally called on the government to ensure corruption is reduced to the barest minimum, as it will negate all the efforts made in revenue mobilization.
