Professor Peter Quartey, former Director of the Institute of Statistical, Social and Economic Research (ISSER), has urged the Ghanaian government to strengthen its revenue mobilization. He specifically called for an expansion of property tax collection and the inclusion of more informal sector businesses into the tax net. This move aims to tap into what he describes as "low-hanging fruits" for increased government revenue.
This recommendation comes at a critical time for Ghana, as the nation continues to navigate economic challenges and seeks sustainable ways to finance its development agenda. Expanding the tax base, particularly by formalizing the informal sector, could significantly reduce the country's dependence on borrowing and improve fiscal stability. Property taxes, often under-collected, represent a substantial untapped resource for local government funding and national revenue.
Ghana's economy has historically struggled with a narrow tax base, with a large portion of economic activity occurring in the informal sector, which largely operates outside the formal tax system. This situation limits the government's ability to generate sufficient domestic revenue to fund public services and infrastructure projects. Previous attempts to broaden the tax net have faced implementation challenges, highlighting the complexity of integrating informal businesses into the formal economy.
Professor Quartey's insights are particularly relevant given his extensive background in economic research and policy analysis. He emphasized that the government has not fully utilized existing revenue opportunities. His call aligns with broader economic discussions about Ghana's fiscal sustainability and the need for robust domestic resource mobilization. The government has been under pressure to improve its revenue generation to meet its financial obligations and reduce its debt burden.
The implications of successfully implementing these measures are substantial. Increased revenue from property taxes and the informal sector could provide the government with more fiscal space to invest in critical sectors like education, healthcare, and infrastructure. It could also lead to a more equitable distribution of the tax burden, as currently, the formal sector bears a disproportionately large share. Decision-makers will need to develop effective strategies to overcome resistance and ensure fair implementation.
Expanding the tax net will require a multi-faceted approach, including public education campaigns, simplified tax registration processes, and robust enforcement mechanisms. The government must also consider the capacity of local assemblies to effectively collect property taxes. Success in these areas could significantly alter Ghana's economic trajectory, fostering greater self-reliance and reducing vulnerability to external economic shocks. This strategic shift is crucial for Ghana's long-term economic stability and growth.