This archive report was first published on 7 October 2019.
Published on October 7, 2019, a stark reality about Ghana's economy has been revealed by the Institute for Fiscal Studies.
According to the Executive Director, the country's tax system is woefully inadequate, failing to mobilize enough revenue to finance its deficit. As a result, the government is forced to borrow heavily to cover its expenses.
He pointed out that 84% of the country's tax revenue is used to repay interest on debt, leaving a mere 16% for other essential expenditures. This, he emphasized, is a clear indication of the country's poor tax administration and a weak tax system.
"We have a very big problem with our tax system," he said. "Even with a GDP of over GH¢300 billion, only 12.6% of that is collected as tax. If our tax system is weak, we will not get the revenue, regardless of how high our GDP is."
He also highlighted the issue of tax compliance, stating that it is very weak in the country. This, he believes, is a major contributor to the country's debt burden, which has increased from GH¢9.8 billion in 2008 to GH¢205 billion as of now.
Prof Kusi urged the government to take immediate action to address this issue, emphasizing that dealing with it does not necessarily mean increasing taxes. Rather, it requires improving tax compliance and addressing the underlying issues with the tax system.
