In an era of fiscal challenges and evolving economic priorities, governments around the globe are seeking innovative ways to bolster revenue without imposing undue burdens on their citizens.

In Ghana, a similar conversation is taking shape, with calls for a reassessment of the country’s tax structure. One prominent voice in this dialogue is Professor Williams Peprah, an Associate Professor of Finance at Andrews University in Michigan, USA. He emphasizes that a well-implemented property tax regime could serve as a critical tool to offset revenue shortfalls while boosting the tax-to-GDP ratio.

Professor Peprah pointed to the missed opportunities of previous administrations in leveraging property taxes as a sustainable revenue source. Despite being a longstanding concept in Ghana’s tax system, property tax remains underutilized due to challenges in enforcement, valuation inconsistencies, and a lack of political will.

“Studies suggest that property tax alone could contribute around 2% to 3% to our revenue-to-GDP ratio. Implementing this effectively could help offset any revenue shortfalls moving forward,” Professor Peprah argues.

This perspective gains significance in light of ongoing discussions to abolish less effective tax measures such as the Electronic Transaction Levy (E-Levy) and COVID-19-related taxes. According to Professor Peprah, these revenue streams have faced resistance and implementation hurdles, making property tax a viable alternative.

Why Property Tax?

Property tax is widely regarded as one of the most equitable forms of taxation. It is based on the value of immovable assets like land and buildings, ensuring that taxpayers contribute in proportion to their wealth. Moreover, property tax revenues are relatively stable and predictable, making them a reliable source of funding for long-term development projects.

For Ghana, a country aspiring to bridge fiscal gaps and drive infrastructural development, the potential benefits of an effective property tax regime are immense. By enhancing enforcement mechanisms, addressing valuation discrepancies, and ensuring that tax revenues are reinvested into local communities, the government can generate significant revenue while fostering trust among citizens.

Countries that have successfully implemented robust property tax regimes offer valuable lessons for Ghana. For instance, in the United States, local governments rely heavily on property taxes to fund public services such as education, healthcare, and infrastructure. These taxes are often linked to transparent valuation systems and regular audits, ensuring fairness and accountability.

Professor Peprah suggests adopting similar measures in Ghana. He emphasizes the need for an updated property valuation database, digitized records, and technology-driven enforcement mechanisms to reduce evasion. “Ensuring the property tax regime is enforced and addressing other expenditure adjustments will significantly reduce the deficit we are concerned about,” he advised.

A Complement to Broader Tax Reforms

While advocating for property tax reforms, Professor Peprah underscores the importance of a broader, business-friendly tax environment. He highlights the need to rationalize existing tax policies and eliminate practices that hinder business growth.

“For instance, specific issues like VAT, where taxes are levied on top of other taxes, must be addressed and re-aligned,” he explains. Simplifying tax structures, reducing administrative burdens, and ensuring fairness are essential steps toward fostering a thriving business ecosystem.

Such reforms, he notes, would encourage compliance and create a positive ripple effect throughout the economy. By making tax policies more accommodating, the government can win the trust of the business community, ultimately expanding the tax base.

Professor Peprah also ties his recommendations to the broader economic challenges Ghana faces. A stable exchange rate regime, for example, is critical to the success of any fiscal or tax reform initiative. He urges the government to prioritize currency stability as part of its efforts to establish a 24-hour economy.

“Economic stability and a stable exchange rate are foundational for attracting investments and fostering business growth,” he explains. Coupled with transparent tax reforms, these measures could position Ghana as a hub for business in the West African region.

As Ghana navigates its fiscal landscape, the insights of experts like Professor Peprah provide a roadmap for sustainable revenue generation. Property tax reforms, when implemented effectively, could become a cornerstone of the country’s economic strategy.

Beyond revenue generation, such reforms have the potential to enhance public trust in the government’s fiscal management. By reinvesting property tax revenues into community development and ensuring transparency, the government can foster a sense of ownership among citizens.