President John Dramani Mahama has declared that the government will prioritize improved tax collection and compliance instead of introducing new taxes. This strategy aims to increase domestic revenue mobilization. The President stated that the government's tax policy focuses on making revenue collection more efficient.
This efficiency drive also seeks to reduce the tax burden on individuals and businesses through reforms to the existing tax regime. The government has already abolished several taxes unpopular with the public. These include the Electronic Transfer Levy (E-Levy) and the COVID-19 Health Recovery Levy. Efforts are also underway to rationalize other taxes.
This policy shift aligns with Ghana's ongoing efforts to strengthen its public finances and achieve fiscal sustainability. The country faces persistent challenges in expanding its tax base and ensuring compliance. Data from the Ghana Revenue Authority (GRA) often highlights a significant gap between potential and actual tax revenues. Previous administrations have often resorted to new taxes, which sometimes caused public discontent and negatively affected economic activity.
President Mahama specifically noted that the government removed taxes described by Ghanaians as “nuisance taxes.” He confirmed, “The COVID levy is gone, the E-Levy is gone, and we’re working to rationalise the other taxes.” He added that overall, indirect taxes, specifically value-added taxes, have seen a reduction from 21 percent to 20 percent. The President emphasized that the current priority is to strengthen tax administration and eliminate leakages within the revenue collection system, rather than imposing additional taxes.
This approach has significant implications for Ghana's economic future and investor confidence. Increased revenue efficiency could lead to a more stable fiscal environment, reducing reliance on borrowing. Should tax collection truly improve over the next two to three years, President Mahama indicated the possibility of reducing the corporate income tax. Such a move would aim to encourage businesses to reinvest some of their profits. This could stimulate economic growth and job creation, attracting more local and foreign investment.
Decision-makers and market observers will closely monitor the government's progress in implementing these tax collection reforms. The success of this strategy will be crucial for Ghana's economic outlook. It will also determine if the government can indeed reduce the tax burden without compromising essential public services. President Mahama made these remarks during a courtesy call by the Kwahu Business Advocacy Group at the Jubilee House on Wednesday, July 8.