Ghana currently loses an estimated 60% of its potential Value Added Tax (VAT) revenue. This significant shortfall is due to widespread non-compliance and systemic inefficiencies in the tax collection system. Finance Minister Dr. Cassiel Ato Forson disclosed this alarming figure during the 2026 Mid-Year Fiscal Policy Review in Parliament.
The government is now taking decisive steps to address this issue by implementing fiscal electronic devices. This reform aims to strengthen tax administration, improve VAT collection, and reduce revenue leakages. The devices will ensure businesses properly account for the taxes they collect from consumers.
This initiative is crucial for Ghana's economic stability and development. The country's reliance on tax revenue for public services and infrastructure projects makes efficient collection vital. The 60% loss represents a substantial amount of money that could otherwise fund critical national priorities.
Dr. Forson commended the previous New Patriotic Party (NPP) administration for enacting the necessary legislation. The Taxation (Use of Fiscal Electronic Device) Act, 2018 (Act 966), provided the legal framework for this reform. He acknowledged that while the concept originated under a prior National Democratic Congress (NDC) administration in 2016, the NPP government deserves recognition for passing the enabling law.
The Finance Minister stressed the unacceptability of losing such a large portion of potential VAT revenue. He called on Parliament to support government efforts to crack down on businesses and individuals. These entities collect VAT from taxpayers but fail to remit it to the State. This practice deprives the nation of essential funds.
The implementation of fiscal electronic devices is expected to play a critical role in reversing this trend. By automating and standardizing VAT collection, the government anticipates a significant improvement in compliance. This will lead to increased revenue for national development.
Dr. Forson also revealed that the Chairperson and Ranking Members of Parliament's Finance and Budget Committees have been invited. They will provide strategic oversight for the implementation of this important initiative. This collaboration underscores the government's commitment to transparency and accountability in the reform process.
The move to implement fiscal electronic devices comes eight years after the enabling legislation was passed. This delay highlights the challenges in bringing such reforms to fruition. However, the current administration is determined to see it through. The long-term benefits of improved tax collection are expected to outweigh the initial implementation hurdles.
Ghana's economic growth and fiscal health depend heavily on its ability to mobilize domestic resources. Addressing the 60% VAT revenue loss is a significant step towards achieving fiscal sustainability. The successful implementation of these devices could set a precedent for other tax reforms. It could also enhance public trust in the tax system.
This reform is part of a broader strategy to enhance revenue generation and reduce the national debt. Improved VAT collection will contribute directly to the government's fiscal targets. It will also support the country's ongoing economic recovery efforts. The Finance Minister's firm stance indicates a strong commitment to fiscal discipline and revenue integrity.