Finance Minister Nominee Cassiel Ato Forson has suggested government is targetting a significant boost in tax revenue, aiming to increase its contribution to Gross Domestic Product (GDP) from the current 13.8 percent to 18 percent in the medium-term.
According to Dr. Forson, the country has substantial untapped potential for tax revenue mobilisation which can be harnessed without imposing additional taxes. Additionally, he stated that the aspirational target of achieving a 20 percent tax-to-GDP ratio by 2027 is overly ambitious, given current challenges.
A revised study titled ‘Survey of the Ghanaian Tax System’, conducted by the Ministry of Finance in collaboration with TaxDev researchers from the Institute for Fiscal Studies (UK) and published in 2024, revealed that although the prevailing tax-to-GDP ratio is nearly six percentage points higher than in 2000, it has shown limited improvement since 2017 and continues to fluctuate.
“We do not necessarily have to increase taxes to generate revenue, there is a need to improve compliance and address inefficiencies in the tax system,” Forson disclosed during his vetting in parliament on Monday, January 13.
While the nation’s tax-to-GDP ratio aligns closely with the average for sub-Saharan African countries, it falls slightly below the global average for nations with similar income levels. Among 28 lower-middle-income countries with available data, Ghana ranked 16th in 2022.
Growth in domestic tax revenues since 2000 has largely been driven by increases in corporate income tax, personal income tax and value-added tax (VAT).
“In the medium-term, my vision – when approved – is raising the tax-to-GDP ratio to between 16 percent and 18 percent; bringing us closer to the standard of our peers,” he stated.
He also expressed determination to scrap what he described as ‘nuisance taxes’ – such as the betting tax, which he argued contributes minimally to revenue generation.
The existing government Medium-Term Revenue Strategy (MTRS) for 2024-2027 seeks to reform the revenue system to support economic growth while enhancing efficiency and equity.
Addressing tax exemptions, Dr. Forson criticised the current framework – describing it as inefficient and inequitable. He also stated that selective application of tax exemptions creates an uneven playing field.
He singled out the previous administration’s flagship One District One Factory (1D1F) initiative, asserting that its tax exemption policies lack transparency and consequently accountability.
