Asantehene Otumfuo Osei Tutu II has called on the Ghana Revenue Authority (GRA) to significantly expand its tax collection efforts within the informal sector. This directive aims to boost Ghana's domestic revenue, reducing the nation's dependence on foreign aid for development projects.
The Asantehene made these remarks during a courtesy visit by the GRA Board and Management to the Manhyia Palace. He highlighted that while the GRA has shown progress in revenue collection under its current leadership, substantial opportunities remain untapped in the informal economy. Integrating this sector into the tax system is crucial for broadening the country's financial base.
Ghana's economic stability and growth are heavily reliant on its ability to generate sufficient internal funds. The traditional focus on formal sector workers and businesses has left a large portion of economic activity untaxed. This imbalance contributes to fiscal deficits and limits the government's capacity to invest in essential services and infrastructure. Expanding the tax net is a key component of Ghana's long-term economic self-sufficiency strategy.
Otumfuo Osei Tutu II specifically suggested that informal groups, such as hairdressers, mechanics, and drivers, could form cooperatives. This structure would simplify their identification and integration into the tax system. He also urged the GRA to develop innovative tax collection methods and strengthen existing mechanisms to minimize revenue leakages, which currently undermine collection efficiency.
The Asantehene commended the GRA's current leadership for improvements in revenue mobilization. He noted, "I have observed an improvement in revenue collection since the current Board and Management took over. This is due to the policies you have put in place." Despite these gains, he stressed that "some leakages still exist, and I urge you to work at addressing them."
The GRA is actively implementing several tax reforms designed to enhance revenue collection and streamline tax administration. These reforms have, however, generated some concerns from the business community, leading to calls for broader stakeholder engagement. Ricketts Hagan, the Board Chairman of the GRA, confirmed that the Authority is engaging with stakeholders to ensure the effective implementation of these changes.
Mr. Hagan mentioned the introduction of new systems, including Publican AI, as part of measures to improve revenue mobilization and tax administration. He acknowledged initial public apprehension but stated that "people are beginning to understand the system." The Commissioner-General of the GRA also appealed for public support for the ongoing reforms, emphasizing their importance for national development.
The push to formalize and tax the informal sector is a critical policy objective for many developing economies. In Ghana, where the informal sector accounts for a significant portion of economic activity and employment, successful integration could unlock substantial revenue. This would allow the government to fund its development agenda more effectively, reducing reliance on external borrowing and aid. The GRA's ability to navigate public concerns while implementing these reforms will be vital for their success and for Ghana's fiscal future.