By Dickson ASSAN &Ahmed TAHIRU
Ghana’s informal sector employs nearly 80percent of the workforce yet contributes only 27.4percent to GDP, according to the Ghana Statistical Service’s Status and Quality of Employment Report (2000–2023). This stark imbalance illustrates the paradox of a vibrant economic engine operating largely outside the tax net.
The solution lies not in brute enforcement but in crafting a visionary, inclusive, and digitally anchored tax framework; one that empowers informal sector actors such as market traders, barbers, artisans, content creators, and small business owners.
Such a system should generate the public revenues needed for education, healthcare, roads, and social protection, while earning the trust and participation of the very people it seeks to include.
Understanding the challenge
The Ghana Revenue Authority (GRA) has attempted to integrate the informal sector into the tax base through presumptive taxes, market levies, and mobile money payments. Yet adoption remains low due to several persistent challenges:
- Limited awareness of obligations, procedures, and deadlines
- Complex or bureaucratic processes that discourage engagement
- Deep distrust, fuelled by lack of visible benefits from taxes paid
- Low digital capacity and continued reliance on inefficient paper systems
- Irregular income patterns, which make fixed tax payments daunting
Data from GRA and institutions like the Centre for Social Policy Studies show that effective tax collection among informal businesses remains below 25percent, even though they constitute over 70percent of microenterprises nationwide.
A roadmap for inclusive and digital taxation
Ghana must adopt a three-pillar approach based on empowerment, digital innovation, and collaborative governance.
Tailored, technology-driven tax solutions
- Modular presumptive tax bands: Classify informal businesses by turnover or type into simple, predictable tax bands. Example: A coconut seller falls in Band A (¢10/month); a tailoring shop in Band B (¢30/month).
- Ghana card integration: Leverage the Ghana Card’s unique identification system to register all informal sector taxpayers seamlessly. This will help eliminate duplication, simplify record-keeping, and enhance accountability while enabling real-time monitoring of compliance history.
- Mobile and USSD-based filing: Taxpayers should register, select their presumptive band, file returns, and pay taxes using USSD codes or a tax app, supported by mobile money platforms.
- Simple, frequent communication: Quarterly updates via SMS or apps can remind users of tax due dates, confirm payments, and give clear, jargon-free summaries of obligations.
- Incentives for compliance: Regular filers could receive data bundles, health insurance discounts, or priority in business grant schemes—positioning tax as a pathway to growth, not just obligation.
Trust and Community Engagement
- GRA–Trade union dialogue: Establish ongoing consultations with trade unions and sector associations like GUTA and artisan groups. A participatory design process will secure buy-in, ensure relevance, and reduce resistance when new tax measures are introduced.
- Transparency on tax usage: Government must demonstrate visible and impactful use of collected taxes renovated markets, better roads, improved sanitation, and localized public services.
- Community tax ambassadors: Empower respected community figures to act as tax educators and liaisons, especially in low-literacy areas.
- Accessible grievance channels: Allow informal taxpayers to raise concerns and get support via WhatsApp bots, call centres, or local kiosks.
Global inspiration – Learning from Kenya and others
- Kenya’s Digital Services Tax: In 2021, Kenya introduced a 1.5percent digital services tax targeting income from online platforms, whether from content creation, freelancing, or e-commerce. The Kenya Revenue Authority combined taxpayer education, mobile filing, and outreach to platform providers to broaden compliance. Ghana can adopt a similar model for influencers and online traders.
- Tanzania’s E-Filing Platforms: Tanzania’s TRA developed a simplified e-filing platform for informal traders, supported by regional tax clinics to drive digital adoption. This decentralized support structure has been key to building confidence and compliance.
- Rwanda’s Performance-Based Tax Credits: Rwanda rewards compliant SMEs with preferential procurement opportunities and easier access to credit—reinforcing the link between taxation and business growth.
Ghana can combine these international best practices with its own local realities to create a context-sensitive and effective informal sector tax strategy.
Conclusion
A successful informal sector tax strategy must go beyond compliance. It must affirm the dignity of the informal worker, recognize their economic value, and make taxation a tool for empowerment—not a burden. The Ghana Card, digital payment systems, and mobile technology offer a powerful infrastructure for transforming tax administration. But these must be matched with transparent governance, continuous consultation with stakeholders, and visible reinvestment of revenue in community services. When traders and artisans see their taxes building clinics, roads, and schools, they will no longer ask why they should pay tax but rather, how much more they can contribute.
>>>Dickson Assan, CA, MSc., BSc. (First Class), MCIT (Student), is a Chartered Accountant, Career Coach, and Youth Advocate. He writes on taxation, accounting for SMEs, and career development. He can be reached via [email protected] and linkedin.com/in/dickson-assan-accountant-financemanager
>>>Ahmed Tahiru is a dedicated financial literacy advocate and aspiring entrepreneur with a mission to empower individuals through knowledge. With a deep passion for helping others unlock their financial potential, he believes that financial education is key to personal and community growth. He can be reached via +233 543 460 166 or [email protected] and www.linkedin.com/in/ahmed-tahiru
