Rethinking Ghana’s Tax Strategy for Economic Growth
Renowned economist Professor Godfred Bokpin has urged the government to reassess its approach to taxation, emphasizing that taxes should be seen not just as a revenue source but as a catalyst for economic growth and business development.
Speaking on Channel One TV on Tuesday, March 11, 2025, Prof. Bokpin expressed concerns over Ghana’s current tax structure, arguing that recent tax increases have not significantly improved tax buoyancy. Instead, he observed a worrying trend of tax substitution, where new taxes merely replace existing ones without enhancing overall revenue efficiency.
For more on effective tax policies, visit the Ghana Revenue Authority.
The Burden on Businesses and Households
Prof. Bokpin cautioned against overburdening the “faithful few”—businesses and households that consistently comply with tax policies. He stressed that the government should focus on deploying effective tax measures that encourage economic activity rather than stifle it.
“If you assess the tax structure we have deployed and measure its overall efficiency, these additional taxes have not increased our tax buoyancy. What we are experiencing is a level of tax substitution. However, the real question is: what effective tax handles should we deploy to generate more revenue without burdening the faithful few?”
Taxation as an Economic Enabler, Not a Hammer
Professor Bokpin challenged the government’s traditional view of taxation, noting that tax policies should foster business growth and consumer spending, rather than merely function as a revenue-generating tool.
“Tax is not just an instrument to raise revenue. Too often, we treat taxation as a hammer—seeing every issue as a nail to be hit. In doing so, we are nailing businesses, households, and other economic drivers. But taxation should act as an enabler to promote businesses and consumption.”
Learn more about global best practices in taxation at the International Monetary Fund (IMF).
The Need for Tax Efficiency and Economic Incentives
Prof. Bokpin’s remarks align with growing concerns among business leaders and economists who argue that Ghana’s current tax system discourages entrepreneurship and investment.
To enhance tax efficiency, experts suggest:
- Broadening the tax base rather than increasing rates.
- Reducing reliance on indirect taxes that disproportionately affect low-income earners.
- Encouraging digital tax systems to capture e-commerce and informal sector transactions.
- Providing tax incentives for businesses that create jobs and drive economic growth.
For insights on sustainable tax policies, check out the World Bank’s taxation reports.