The Ghana Revenue Authority (GRA) has stated that the government target of increasing its tax-to-GDP ratio to at least 20% by 2021 cannot be achieved.
According to the GRA, the inability to meet this target is mainly due to the rebasing of the Ghanaian economy in 2013.
“… despite the rapid nominal growth in the economy, domestic revenue mobilization has lagged considerably behind, highlighting even greater urgency to grow revenue. The rebasing makes the original target of raising tax revenues by a percentage a year so that by 2021 tax-to-GDP ratio would be at least 20%, not achievable”.
In its 3rd Strategic Plan spanning the period 2019-2021, the GRA noted that the rebasing of the economy affected all economic indicators, with revenue-generating capacity being one of the major areas affected.
The GRA indicated that the rebasing of the economy in 2010 resulted in the expansion of the economy by 60%, the basis on which Ghana was classified as a lower-middle-income country, but at the same time resulted in a significant drop in the tax-to-GDP ratio of the country.
Also, using 2013 as the base year, the current rebasing has expanded the economy by 25% in 2017. This, according to the GRA, has resulted in a decline in the revenue-GDP-ratio for 2017 from 16.6% to about 13%. This caused Ghana’s tax effort to fall far below other Sub-Saharan African countries in the rankings.
The 3rd Strategic Plan was prepared to serve as a roadmap of bringing the GRA back on track to meet its revenue target. The plan seeks to provide new directions to strengthen revenue administration as a means of mobilizing revenues to fulfill this mission. The GRA has, however, called on its staff to exhibit a strong commitment to the revenue mobilization efforts.
The GRA has therefore revised its yearly target for revenue growth to get back on track.
“To get back on track, we need to increase revenue by a more ambitious growth of 2% per year”.
The current plan is developed to be in tandem with the vision of the government to develop “Ghana Beyond Aid” and the increasing urgency of domestic resource mobilization, the need to encourage voluntary tax compliance, the need to leverage on technological innovations to improve data management and routine internal procedures, as well as lessons drawn from the 2nd Strategic Plan that covered 2015-2017.
The GRA in the current strategic plan highlighted notable challenges that inhibit their ability to mobilize enough revenues. This comprises capacity constraints in the governance of revenue administration, which according to GRA raised questions as to whether their human resource has been strategic enough.
Another major challenge highlighted was the integrity of revenue administration staff in the eyes of the taxpayers, which tremendously affects the ease of enforcement and tax collection as well as the level of tax payer’s compliance.
Ineffective internal co-ordination, primarily the slow pace of integration between the Domestic tax and Customs Division, was also cited as one of the major challenges.
To address these challenges, the GRA noted that the current plan emphasized the system of corporate governance between domestic tax and Customs divisions by rationalizing existing roles and responsibilities, reporting lines and how to achieve effective supervision throughout the organization.
The 3rd Strategic Plan has five strategic goals: grow revenue; improve Customs and Domestic tax compliance; leverage ICT, enhance administrative efficiency; develop professional and motivated staff.
In line with the first goal of growing revenues, GRA noted that it will harness untapped sources of revenue, minimize revenue leakages in both Customs and Direct Tax collection systems, as well as seek closer collaboration with non-tax revenue administration where possible.
