Ghana’s revenue mobilization drive remains below its peers within the sub-region despite efforts being made by government to change the status quo.
Recent data point to the fact that aside tax, the country has not been able to explore the non-tax component which has huge potentials to improve the country’s revenues.
Data from the Bank of Ghana (BoG) show that revenue raised from sources classified as non-tax was GH¢793.96 million below the target of GH¢3,225.16 million for the first three months of the year.
Per the statistics from the Central Bank, Non-Tax revenue amounted to GH¢2,431.2 million in the first quarter of 2022 (Q1, 2022), representing 24.6 percent shortfall from the target for the period.
“The underperformance of non-tax revenue was mainly due to lower than budgeted lodgments and retention resulting mainly from lower collection efforts by some MDAs. Lower dividend payments against the target also contributed to this development”.
Bank of Ghana
However, compared to the corresponding period of 2021, the outturn for Q1, 2022 represented a year-on-year growth of 47.6 percent over the total Non-Tax revenue of GH¢1,646.89 million mobilized in the first quarter of 2021.
Even though this revenue component remains low compared to that of tax revenue, critical analyses of the data show some improvements since Q1, 2020 when the COVID-19 pandemic was reported in the country.
In Q1, 2020, government raised a total of GH¢1,483.21 million from non-tax revenue sources. The outturn in Q1, 2021 was an improvement of 11.04% over the total amount raised in Q1, 2020 before recording a further year-on-year improvement in Q1, 2022.
The year-on-year growth means the potentials of this revenue source to government remains very much unexploited and the government should be strategizing on how well to milk this revenue source to complement the tax component which also continued to miss its targets.
Meanwhile, other revenue measures, made up of ESLA proceeds, raked in a total of GH¢1,328.9 million in the first quarter of 2022, exceeding the target of GH¢1,084.7 million by 22.5 percent. This is the only revenue component that exceeded its target in the first quarter of 2022.
Even the government could not meet its project grants target for the first quarter of the year. Government received project grants in the sum of GH¢84.6 million, lower than the envisaged target of GH¢155.2 million by 45.5 percent.
This outturn was also significantly lower than the GH¢559.3 million recorded in the corresponding period of 2021, thus reflecting a year-on-year decline of 84.9 percent.
Tax revenue misses target in first three months
Tax revenue, comprising taxes on income & property, taxes on domestic goods and services and international trade taxes, amounted to GH¢12,864.2 million (2.6% of GDP), lower than the target of GH¢14,680.6 million (2.9% of GDP). The outturn means government missed its target by 12.4 percent in Q1, 2022.
Likewise, Taxes on income and property, made up of personal income tax (PAYE), self-employed taxes, company taxes (including taxes on oil), royalties from oil and minerals, other revenue, and airport taxes, amounted to GH¢5,916.2 million (1.2% of GDP). This outturn was 16.3 percent below the target of GH¢7,066.7 million (1.4% of GDP) with all the key tax components missing their respective targets.
Also, 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 the first quarter of 2022 was GH¢5,825.8 million (1.2% of GDP), and about 6.2 percent lower than the target.
Taxes on International Trade, comprising mainly import duties, amounted to GH¢1,863.4 million and was below the target of GH¢2,047.5 by 9 percent. The performance of the various tax components means that government will need to step up its game in the remaining quarters to be able to meet its overall revenue targets GH¢100.5 billion in the 2022 fiscal year.
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