Ghana’s President John Dramani Mahama has announced sweeping plans to reform the nation’s tax regime, vowing to streamline and clarify existing levies to boost compliance and stabilize revenue streams.
The move comes as his administration grapples with a daunting $15 billion domestic debt repayment deadline in 2025, part of broader efforts to restore fiscal credibility amid economic headwinds.
Speaking to Bloomberg TV at the Munich Security Conference, Mahama criticized predecessors for relying on a “tax overload” that he claims backfired, suppressing revenue despite rate hikes. “The previous government slapped on more taxes, only to see returns diminish. We’re now rationalizing these tax handles—making them transparent, understandable, and fairer to encourage voluntary compliance,” he explained. The reforms align with Ghana’s target to lift revenue to 24% of GDP by 2028, a goal Mahama insists requires smarter fiscal architecture, not just higher burdens.
Debt Pressures Drive Urgency
With $15 billion in domestic debt obligations looming next year, Mahama revealed the revival of a sinking fund to manage repayments, though details on funding sources remain sparse. Economists note the strategy echoes past debt management tactics, raising questions about sustainability. “Reactivating the sinking fund is pragmatic, but without new revenue streams or growth catalysts, it’s a stopgap,” remarked Accra-based financial analyst Nana Yaa Asantewa.
Tax Reform: Promises and Pitfalls
The proposed tax overhaul aims to simplify a system critics call labyrinthine, riddled with overlapping levies that confuse businesses and individuals alike. While Mahama’s push for transparency has drawn praise, skeptics highlight execution risks. Past attempts to rationalize taxes, such as the botched e-levy rollout in 2022, eroded public trust. “Good intentions aren’t enough,” said tax policy consultant Kwame Mensah. “Success hinges on stakeholder engagement and tech-driven administration to curb evasion.”
Public reaction is mixed. Traders in Kumasi’s Kejetia Market welcomed the prospect of fewer “hidden charges,” while corporate leaders cautioned against abrupt changes. “Stability is key—we need coherence, not constant tweaks,” argued CEO Akosua Adomako of a leading agro-processing firm.
The reforms unfold against a backdrop of inflation hovering near 18% and a cedi that has shed 12% against the dollar this year. Mahama’s team faces a tightrope walk: boosting revenue without stifling growth, while reassuring IMF and bondholders of Ghana’s debt sustainability.
As debates rage, one reality is clear: Ghana’s path to recovery demands more than fiscal tweaks—it requires rebuilding confidence in a system where policy clarity and taxpayer fairness become the norm, not the exception. For now, Mahama’s pledges offer hope, but the road ahead is fraught with tests only tangible results can pass.
