The Director of the Institute for Statistical, Social and Economic Research (ISSER), Prof. Peter Quartey, has criticised Ghana’s current tax regime, stating that it fosters evasion and benefits only a select few.
Speaking at the Graphic Ecobank Economic Forum, Prof. Quartey attributed the problem to the imposition of high taxes on individuals and businesses in the government’s bid to meet revenue targets.
He warned that tax policy should not merely be about meeting targets, but also about influencing behaviour and enabling efficient revenue collection.
“Our tax levels are too high, in my view. Our VAT is 21% plus. Some are even straight levies where you can’t claim input tax. But look at our competitors—some are paying 15%, 18%, while we’re charging over 21%. What you are doing is encouraging people to evade,” he said.
Prof. Quartey cited the structure of Ghana’s VAT system as a major contributor to the burden on businesses and consumers, noting that it complicates compliance and incentivizes avoidance.
He expressed concern that the high tax rates have led to collusion between businesses and tax officials, which undermines national revenue mobilisation efforts.
“When your tax is too high, it calls for tax evasion. So you are enriching customs officials, you are enriching businessmen, and the government is struggling for money,” he lamented.
Prof. Quartey also highlighted the difficulty in taxing Ghana’s largely informal economy, which makes up over 80% of the country’s economic activity.
“We haven’t devised a proper mechanism for taxing the informal sector. All we do is focus on the 20% in the formal sector. Why should we over-tax them and leave the 80%?” he questioned.
He proposed a comprehensive review of the VAT system and broader stakeholder engagement to bring the informal sector into the tax net.
“We need to look at this critically. Otherwise, we won’t make significant inroads in tax revenue mobilisation. That’s why we keep borrowing—because we’re not raising enough revenue,” he stressed.
He further cautioned that simply increasing taxes does not guarantee a higher tax-to-GDP ratio, citing Ghana’s current rate of about 14%, compared to other African countries achieving up to 23%.
Concluding his remarks, Prof. Quartey emphasized the importance of transparency and effective use of tax revenue to build public trust and improve voluntary compliance.
“It’s not just about raising the revenue. It’s about how well you use it to advance the wellbeing of the public,” he noted.
