To achieve the goal of eliminating extreme poverty by 2030, Ghana will need to accelerate anti-inequality policy efforts in order to close the equality gap, economist and finance lecturer at the University of Ghana, Professor Godfred Bokpin, has said.
Speaking at a multi-stakeholder forum organised by SEND Ghana in partnership with OXFAM and the Ghana CSOs Platform on SDGs to share and discuss findings of the Commitment to Reducing Inequality Index (CRII) report in Accra, Prof. Bokpin noted that Ghana has the third-highest income inequality in the Economic Community of West African States (ECOWAS), rising in recent years.
“It is our own actions and inactions that are manifesting in the inequality that we are seeing. Our country crossed a certain threshold that is inhibiting growth, because beyond a certain level of inequality it affects growth; and it affects our ability to improve the wellbeing of Ghanaians. Ghana has crossed this limit, and that’s why we must take the discussion of inequality seriously,” he said.
Making a presentation based on the 2021 Ghana CRII report, Professor Bokpin noted that the country performed poorly by placing 121st out of 158 countries globally on the overall inequality index. When it came to equitable public services and labour rights, Ghana ranked 113th and 128th respectively. The only average ranking was 68th, when it came to the implementation of tax. He reiterated that Ghana needs to do much better to reduce inequality if it is to eliminate poverty by 2030.
He added that the current state of Ghana’s inequality is detrimental, as it is a threat to security. “The reason it is so serious is that the widening inequality is also a threat to our security; the fact that a few Ghanaians are well to do at the top and a majority of Ghanaians go to bed not knowing where their next meal will come from in the morning makes it unsafe for them and all of us,” he added.
Policy recommendation by CRI
The 2021 Ghana CRI Index Report points out that Ghana should increase public service spending, especially on social protection, to 10 percent of the budget by 2030 to move more clearly to universal coverage by 2030 for all vulnerable groups. On health, the reports suggest an increase of 15 percent on the budget to ensure the poor have access to free universal services. For education, CRI is pushing for a 20 percent increase in the budget to achieve universal completion of secondary school.
On tax policies, it recommends that an increase in the corporate income tax rate is pushed to 30 percent, while the top personal income tax rate should also be increased to 35 percent; and making the gift-tax, which applies to inheritances, more progressive. The report also calls for a new wealth tax that will help bridge the equality gap.
The CRI Index Report is also urging government to show commitment to increasing tax collection rapidly, by accelerating efforts to end exemptions and deductions for corporations and wealthy individuals. It also highlighted the need to design an effective and context-specific property taxation strategy; stressing that property taxation is a form of wealth tax that presents an excellent opportunity to make up the gaps created by COVID-19.
On labour, the CRI index report is urging government to sharply increase the minimum wage and ensure it is implemented by all companies. It also pointed out the need to extend rights and social protection to workers in the informal and vulnerable sectors to ensure equity.
It further proposed that government should explore prospects for negotiating a comprehensive cancellation of its debt as soon as possible, so as to free-up massive amounts of money for anti-inequality spending. It added that government should request from the International Monetary Fund (IMF), World Bank and other experts a comprehensive analysis of potential policies to reduce inequality to ensure that Ghana can eliminate poverty by 2030.