Dr Adu Owusu Sarkodie, an economist and researcher at the Centre for Policy Scrutiny (CPS), has questioned the viability of the government’s compliance enforcement revenue measure for the 2026 financial year, on the back of abolished tax revenues, which have left a revenue shortfall.

According to Dr Sarkodie, in an interview on the tax system structure for 2026, he revealed that historically, whenever the government abolishes taxes, there is a revenue shortfall, and they look for alternative revenue means that always hurt the economy.

He revealed that the current proposed compliance enforcement, as a measure to make up for the shortfall in revenue, after abolishing several taxes this year, is a medium-term measure that will take about 3 years for the government to reap the full benefit. Enforcing tax compliance is essentially a measure to widen the tax net in the absence of new taxes.

“Anytime we [Ghana] abolish and remove taxes, we suffer from a revenue shortfall. Compliance takes time to gather momentum. So, if you abolish a tax in 2026 and you enforce compliance, the likelihood that you get enough revenue in the year 2026, the year that you abolish the taxes and enforce compliance, is very low. So maybe things will be better from 2028, that’s about 3 years later.”
Dr Adu Owusu Sarkodie

He mentioned that the compliance enforcement revenue measure is in the right direction, as a small section of the Ghanaian population has been burdened for too long. However, the government must consider other measures alongside, for the short term.

According to him, the government is focusing on compliance enforcement and non-tax revenue. Moreover, he encouraged that the non-tax revenue be made the focus while the compliance enforcement works effectively in the background for future benefit.

“I think that the emphasis will be on two measures. First is enforcing tax compliance, getting people into the tax bracket, and the second is to emphasize the non-tax revenue.”
Dr Adu Owusu Sarkodie

Revenue from Taxes

According to Dr. Sarkodie, the “ideal tax revenue growth rate should be 2.5 times the GDP growth rate. But Ghana has been doing around 1%, 1.5%. What does it mean? It means that in Ghana, the linkage between economic growth and taxation or taxes is not strong.”

It is expected that as the economy grows, economic activities increase, and incomes increase, people will pay taxes, and the government will collect more revenue. However, that linkage is absent in Ghana, he reiterated.

He attributed the reason to “the informality of the Ghanaian economy, the fact that we cannot tax the income of those informal sector”. Therefore, the government is hoping to enforce tax compliance measures to bring the informal sector on board.

He added that the government has abolished the e-levy, which gave a revenue of about GHȻ 2 billion (varies annually), and now the 1% COVID-19 levy, which is projected to give around GHȻ 2.8 billion and has left a huge revenue shortfall. According to Dr Sarkodie, “COVID-19 was giving us [Ghana] almost the same amount as total royalties from oil and gas, which is estimated to be GHȻ 2.9 billion.”

“That’s about GHȻ 5 billion that you have taken away” from the two abolished taxes, bringing down Ghana’s revenue.

“So, the key action the government is going to use in 2026 is compliance because they have reduced the rate and abolished some taxes. The main avenue to get the shortfall covered is to enforce compliance.”
Dr Adu Owusu Sarkodie

Alternative, More Efficient Revenue Source

He, however, suggested that the government will get more revenue from non-tax revenues, the natural resources and royalties.

“So, if you ask me, where do I think that government will get more revenue? I would say non-tax revenues. I’m talking about how to leverage the natural resources, increasing our shares in gold production, in oil production, and in gas production.”
Dr Adu Owusu Sarkodie

He commended that, as Ghana prepares to begin its own exploration, a lot of revenue will be gained. According to him, “Ghana can get about five billion dollars annually from the natural resources and add to the existing tax revenue that we have. I think that the conversation should now be on the non-tax revenue.”

Ghana should position itself as a resource-rich country and take advantage of its natural resources, he said.

Government Revenue Measures

The government has made a comprehensive reform of the Value Added Tax (VAT) package. These measures include repealing the 1% COVID-19 Health Recovery Levy and decoupling the GETFund and NHIL levies and reintegrating back into the VAT base. The government has increased the VAT registration threshold from GHȻ 200,000 to GHȻ 750,000.

The government aims to reduce the effective VAT rate from 21.9% to 20%, repeal the VAT on mineral exploration and reconnaissance, and extend the zero-rated VAT to locally manufactured textiles until December 2028.

The government has put in place measures to increase revenue while ensuring improved performance from State-Owned Enterprises (SOEs).

In terms of the tax administration and compliance, the government, through the Ghana Revenue Authority (GRA), will implement digital solutions to improve compliance while tackling tax evasion head-on.

According to the government, a fiscal electronic device to report VAT will be operationalized, Artificial Intelligence (AI) will be adopted to inspect pre-arrivals of cross-border shipments to detect undervaluation and under-invoicing, and a VAT reward scheme to encourage public reporting of compliance issues.

The government intends to also establish a recovery unit within the GRA to reclaim lost revenue from illicit import transfers, tighten exemptions, and enforce arrears.

The non-tax measures, tax compliance, and reforms of some tax Acts target the sealing of leakages in Ghana’s revenue collection.

“I think that because we still have the IMF program with us, the government is going to do things right. In 2026, the government will behave like in 2025. If you don’t get revenue, do not spend. So, no revenue, no expenditure. And that’s going to hurt the economy somehow. And I just want to hope that compliance will pick up, for the government to get enough revenue.”
Dr Adu Owusu Sarkodie