At the inaugural Daily Graphic/Ecobank Ghana Economic Forum, Professor Peter Quartey, Director of the Institute for Statistical, Social and Economic Research (ISSER), delivered a timely critique of Ghana’s tax structure — calling it not just inefficient, but counterproductive.
Key concerns raised by Prof. Quartey:
1. Tax levels are discouraging compliance
Ghana’s VAT rate currently exceeds 21%, compared to regional competitors averaging 15–18%. According to Prof. Quartey, such high rates create an incentive for evasion rather than compliance — undermining trust in the system and widening inequality.
“When tax is too high, it encourages evasion. You’re enriching customs officials and businessmen, while government revenue suffers,” he said.
2. A narrow tax base is overburdened
Over 80% of Ghana’s economy operates informally, yet the tax system places the burden on the 20% in the formal sector. This not only distorts equity, but stifles the growth of legitimate businesses that are already struggling under a complex tax code.
“Why are we so focused on the formal 20% and leaving the informal 80% untouched?” Prof. Quartey asked.
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3. Taxation must influence behaviour — not just raise money
Prof. Quartey argued that taxation should serve as a lever to encourage compliance, stimulate growth, and promote fairness — not simply meet fiscal targets.
When the system is perceived as punitive or unfair, it fosters collusion between taxpayers and tax officials, feeding corruption and deepening public distrust.
4. Tax-to-GDP ratio remains below potential
Despite high tax rates, Ghana’s tax-to-GDP ratio stands at just 14%, while many African peers reach 18–23%. This suggests that revenue mobilisation is not just about raising rates — it’s about expanding the base, simplifying compliance, and enforcing accountability.
5. Call for reform and transparency
Prof. Quartey called for an urgent review of the VAT system, greater stakeholder engagement, and innovative strategies to integrate the informal sector. He also stressed that how revenue is used matters just as much as how it’s raised.
“It’s not just about collecting the money — it’s about how well you use it to advance national priorities.”
Bizexcel Partners’ Perspective
As a firm dedicated to driving excellence in governance, finance, and business transformation, Bizexcel Partners fully supports the call for smart, equitable, and transparent tax reform.
We believe:
✅ Broader stakeholder dialogue is essential to build a fair and effective tax culture.
✅ Incentivizing formalization of informal businesses must be a strategic priority.
✅ Technology and digital systems can play a game-changing role in expanding the tax net and reducing leakages.
✅ Trust in public finance — built through transparency and visible impact — will ultimately drive compliance more than enforcement alone.
The big question: How can Ghana redesign its tax system to be both progressive and productive?
We’d love to hear your insights.
