Ghana’s economy is growing, but its tax revenue is not keeping pace, raising concerns among financial experts. Yaw Appiah Lartey, a financial analyst, has sounded the alarm, urging the government to tackle revenue leakages and diversify its income sources. Speaking on Accra-based radio show “Morning Starr,” Mr. Lartey emphasized that the country’s Gross Domestic Product (GDP) growth is not being matched by a corresponding increase in tax revenue, creating a significant gap between economic growth and tax revenue collection.
Mr. Lartey advised the government to negotiate with the International Monetary Fund (IMF) and external creditors, stressing that significant work remains to be done. He also warned that Ghana’s taxation system is vulnerable, with 77% of government revenue derived from taxes, posing a serious risk to the economy if tax revenues decline.
The financial analyst’s concerns are not unfounded. Research has shown that Ghana’s tax revenue generation has been low, with challenges stemming from low voluntary tax compliance, a narrow tax base, and poor stakeholder perception of the tax system. Experts recommend that the government focus on broadening the tax net, strengthening taxpayer registration, and reviewing policy and legislation to address these challenges.
To mitigate the risks associated with Ghana’s over-reliance on taxes, Lartey advocates for diversifying revenue sources. This could involve exploring alternative sources of revenue, such as non-tax revenues, to reduce the economy’s vulnerability to fluctuations in tax revenue. By taking urgent action to address these concerns, Ghana can ensure a more sustainable and resilient economy.
Ruth Abla ADJORLOLO