The Bank of Ghana (BoG) has lamented the slow pace of revenue mobilization in the country which consistently falls short of the target set by the government each year. According to the BoG, the low revenue mobilization is reflecting in both tax and non-tax revenues.
The January 2022 Monetary Policy Report by the Central Bank showed that government missed its overall revenue target for 2021 with revenue outcomes reflecting mixed performances for both tax and non-tax proceeds.
In 2021, Total Revenue & Grants amounted to GH¢67,878.7 million (15.4% of GDP), lower than the target of GH¢72,477.4 million (16.5% of GDP). This outturn represents 93.7 percent of the 2021 target and recorded a year-on-year growth of 23.1 percent.
During the review period, domestic revenue totaled GH¢66,696.44 million (15.2% of GDP), below the target of GH¢71,012.22 million (16.2% of GDP). This means domestic revenues missed the target by GH¢4,315.78 million or 6.1 percent.
Tax revenue performance last year
BoG disclosed that Tax revenue, comprising taxes on income & property, taxes on domestic goods and services, and international trade taxes, all summed up to GH¢55,172.59 million (12.6% of GDP), lower than the target of GH¢55,834.84 million (12.7% of GDP). This represents a negative deviation of 1.2 percent or better still, government missed the target for this tax handle by 1.2 percent last year.
Delving into the performance of individual tax revenue handles last year, the report showed that taxes on income and property was GH¢27,969.73 million (6.4% of GDP). This outturn was 6.6 percent below the target of GH¢29,932.72 million (6.8% of GDP), with most of the key tax components missing their respective targets. Company taxes on oil and other direct taxes fell below their respective targets by 3.9 and 3.5 percent.
Taxes on Domestic Goods and Services, consisting of Domestic VAT, Excise Duty, GET Fund Levy, National Health Insurance Levy (NHIL) and Communication Service Tax (CST) for 2021, totaled GH¢23,567.03 million (5.4% of GDP), about 3.8 percent lower than the target. On year-on-year terms, the collection represents a growth of 32.5 percent.
International trade taxes, comprising mainly import duties, put up a splendid performance last year as global supply chains continue to open-up amid rising importation of goods. According to the Monetary Policy Report, International trade taxes amounted to GH¢6,752.52 million (1.5% of GDP) last year and exceeded the target of GH¢6,613.52 (1.5% of GDP) by 2.1 percent. This tax type also recorded a year-on-year growth of 22.5 percent.
Tax refunds of GH¢3,116.69 million was also lower than the target of GH¢3,423.33 million for 2021, but recorded a year-on-year growth of 20.5 percent.
Non-Tax revenue performance last year
Non-Tax revenue for the period under review was GH¢7,369.34 million, representing 71.5 percent of the target. This means government missed its Non-Tax revenue target by 28.5 percent last year, attributed to a number of factors which affected performances in some MDAs. Nevertheless, the outturn represents a year-on-year growth of 10.5 percent.
“The underperformance was largely due to lower than budgeted lodgements and retentions, resulting mainly from lower collection efforts by some MDAs. Lower dividend payments against budgeted targets also contributed to this development”.
Bank of Ghana
Other revenue measures made up of ESLA proceeds, COVID-19 Levy, as well as Sanitation and Pollution Levy, raked in a total of GH¢3,706.1 million. This fell short of the target of GH¢4,205.1 million by 11.9 percent.
Meanwhile, Government received project grants to the sum of GH¢1,182.22 million, significantly lower than the envisaged target of GH¢1,465.1 million by 19.3 percent. This outturn was also lower than the GH¢1,228.7 million recorded in the corresponding period of 2020, thus reflecting a year-on-year decline of 3.8 percent.
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