The new tax measures introduced in the 2022 budget will increase the country's tax to Gross Domestic Ratio (GDP) to 16.5 per cent, Finance Minister, Ken Ofori-Atta, has said.
The country's current tax to GDP Ratio stands at 12 per cent, which falls below the Sub-Saharan Africa average of 16.5 per cent.
Tax to GDP Ratio basically means the value of tax compared to the value of goods and services produced in the country within a year.
Finance Minister, Ken Ofori-Atta, announced an Electronic Transaction Levy (E-Levy) in the 2022 budget, which is projected to raise GHC6.9 billion in 2022 fiscal year.
Speaking at a press conference on the 2022 budget in Accra on Monday, Mr Ofori-Atta said "these statistics are a poor reflection on the country and highlight the need to change the narrative. We cannot continue to depend on such a low tax base to generate adequate revenue, service and reduce our debt, to build our infrastructure (roads) and to create needed jobs for our youth."
He said the government was determined to enhance domestic revenue mobilisation to reduce borrowing and growing public debt, adding that "The essence of our proposal on the E-Levy is to widen the tax net and generate the required revenue to support entrepreneurship, youth employment, build our infrastructure (especially roads) and reduce our debt."
Mr Ofori-Atta said out of about 18 million potential income taxpayers, only 2.4 million persons (approximately eight per cent of the total population) were registered as personal income taxpayers as of August 2021.
He said only 45,109 entities were registered as corporate taxpayers while 54,364 persons were registered as self-employed taxpayers at the Ghana Revenue Authority, adding that there were about 17 million registered voters and about 19 million active mobile money accounts.
"In using the 17 million registered voters or the 19 million mobile money accounts as a proxy for Ghanaians that are of adult age and economically active, and comparing it to the 2.4 million Ghanaians who pay income tax, we are confronted with the stark reality that the structure of our economy is quite informal, unlike the western economies, and as such, the traditional tax handles, like the personal income tax, also known as PAYE, may not be as effective in raising the required revenue," Mr Ofori-Atta said.
The Minister of Finance emphasised that the E-Levy represented the country's "greatest opportunity to, in the medium term, broaden the tax base and meet the Tax to GDP ratio of 20 per cent as pertains among our peers."
Mr Ofori-Atta said the E-Levy was a new and an innovative way of raising revenue and was meant "to review our approach to tax collection to reflect this new reality."