Government is committed to both evidence-based and transparent tax policymaking – Finance Minister

The Ministry of Finance (MoF) has published an updated Survey of the Ghanaian Tax System, produced jointly with TaxDev researchers from the Institute for Fiscal Studies (UK).

This Survey, which provides information on Ghana’s tax system as of January 2024, is intended as a repository of key information for researchers, policymakers and the public, and updates a previous edition of the Survey published in 2021.

As well as setting out the key design features for the different taxes in operation in Ghana, it also looks at recent trends in policy, administration and revenues, and compares key information on tax rates and revenues with other countries.

The key findings of the report include:

1. At 13.8% in 2022, Ghana’s tax-to-GDP ratio remains below the government’s target of 18-20% by 2027. Though this ratio is almost 6 percentage points higher than in 2000, it continues to fluctuate and has made minimal gains since 2017.
2. Much of the growth in Ghana’s tax revenues since 2000 has come from increased corporate and personal income tax takes, and VAT and similar taxes, though revenue growth from the PIT and VAT-type taxes has stagnated more recently. These three types of tax made up nearly 70% of total collections in 2022 – up from 57% in 2000.
3. Tax collections from international trade have become far less important in the revenue mix, though they remain significant: 33% of overall tax revenues were collected on imported goods in 2022 (including VAT on imported products), compared with 54% in 2000. The contribution of import duties specifically to total tax revenue declined from 18% in 2000 to 13% in 2022.
4. Ghana’s tax-to-GDP ratio is fairly typical of countries in sub-Saharan Africa. However, considering countries of a similar income level across the world, Ghana’s tax revenue collections are slightly below average: out of 28 lower middle-income countries with available data, Ghana ranked 16th in 2022.
5. Analysis of tax rates and revenues across countries suggests differences in relative revenue mobilisation by tax type in Ghana. While recent growth in corporate income tax revenues means that they exceed revenues in other countries using similar tax rates, personal income tax and general sales tax revenues are lower than would be expected, all else being equal.

In a  statement, the Finance Ministry said that “The Government of Ghana is committed to both evidence-based and transparent tax policymaking, with the Survey of the Tax System, alongside the Medium-Term Revenue Strategy, being a key part of this approach.”

It added “The Ministry of Finance and the Ghana Revenue Authoritywith the support of the UK Foreign, Commonwealth and Development Office (FCDO) have been collaborating with the Institute for Fiscal Studies (IFS) UKto jointly conduct analysis of some tax policy issues and build long term analytical capacity in evaluating the impacts of tax policies. The work the researchers from the IFS undertake with the team from MoF and GRA falls under broader work being undertaken at the FCDO-funded Centre for Tax Analysis in Developing Countries (TaxDev). This Survey of the Tax System is just one part of this collaborative programme of work, which began in 2016 and is set to continue until 2030.”

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