Former Finance Minister and Special Presidential Advisor on the Economy, Seth Terkper, has cautioned that structural weaknesses in Ghana’s tax system are undermining revenue mobilisation and driving an unsustainable borrowing pattern.
Speaking at the launch of his book VAT in Africa – The Ghanaian Experience, Mr. Terkper highlighted how the proliferation of levies has eroded the streamlined framework established by the 2013–2016 reforms. He noted that while the Value Added Tax was intended to replace multiple consumption taxes, many such charges have resurfaced as standalone levies, creating administrative complexity and encouraging avoidance and evasion.
Mr. Terkper linked these tax distortions directly to Ghana’s rising public debt, pointing out that insufficient domestic revenue has forced the government into repeated borrowing to cover budget shortfalls. He recalled that debt restructuring formed part of the country’s US$3 billion IMF programme agreed in 2023 and warned that continuing this pattern threatens fiscal stability.
Rather than introducing new taxes, Mr. Terkper urged policymakers to refocus on robust tax administration and a simplified “pillars” approach based on two core taxes—one on income and another on expenditure—mirroring best practices in advanced economies. He argued that overreliance on customs duties and trade taxes, common in developing countries, should give way to more efficient domestic revenue sources.
As Ghana strives to meet its revenue targets without stifling growth, Mr. Terkper’s prescription underscores the delicate balance between enhancing collection and preserving economic competitiveness. His remarks add urgency to ongoing discussions on tax policy reform ahead of the government’s next budget cycle.
