Ghana must prioritize a fairer distribution of tax obligations to sustainably boost government revenue, Dela Agbo, CEO of EcoCapital Investment, told B&FT ahead of the 2025 budget presentation.
With persistent revenue gaps pressuring policymakers, Agbo stressed the need to expand the tax net to include the informal sector, which constitutes 20-30% of the economy but remains largely untaxed. “Effectively taxing informal traders, artisans, and small businesses could ease the burden on compliant entities while raising critical funds,” he said, as the Finance Ministry intensifies efforts to rationalize exemptions and improve compliance.
Agbo also highlighted underutilized property taxes, noting that high-value real estate often escapes fair taxation. He cited a $500,000 home generating a mere $5,000 annually in property taxes as symptomatic of systemic enforcement failures. Reforms targeting luxury goods and services—such as nightclubs, premium alcohol, and high-end products—could further ensure wealthier individuals contribute proportionally, he added, aligning with government discussions on progressive taxation.
Finance Minister Dr. Cassiel Ato Baah Forson emphasized inefficiencies in Ghana’s tax framework, including VAT exemptions costing 1.9% of GDP annually. “Tax revenues have stagnated at 13.5% of GDP, lagging behind peers,” he said at a recent economic dialogue. Plans to digitize tax systems and curb exemptions aim to address a revenue shortfall exacerbated by widespread noncompliance.
While fiscal consolidation efforts aim to reduce the deficit to 4.2% of GDP in 2025, Agbo cautioned against stifling growth. “Balancing revenue drives with support for businesses is key to maintaining investor confidence,” he said, noting government steps to lower borrowing costs through strategic Treasury bill auctions.
The administration has also trimmed ministerial appointments from 100 to 60 and restricted nonessential spending—a move Agbo praised as “a good saving.” Dr. Forson echoed the need for austerity, vowing to redirect resources to priority sectors. As Ghana navigates fiscal pressures, the challenge lies in harmonizing equitable taxation with economic resilience.
