Seth Terkper, Ghana’s former Finance Minister, recently criticized the current tax system, stating that it is the most severe and punitive in the nation’s history. The opposition National Democratic Congress has also accused the New Patriotic Party government of introducing over 50 new taxes since 2017. This continuous imposition of taxes has resulted in public outrage in Ghana. Recently, Ghanaians were hit with two new taxes, namely the Value Added Tax (VAT) on residential electricity usage and the Emissions levy.
In an interview with Citi News‘ Hanson Agyemang on Monday, Mr. Terkper insisted that the country’s current tax rates are excessively high. He explained that such high rates could potentially drive individuals to seek ways to evade these taxes.
“I think we are seeing the worst of the tax system… It is the most punitive and worst tax structure that we have had. And as with every tax that is punitive, you will end up not collecting, or generating as much revenue as possible,” he said.
He further underscored that “But more importantly, when you begin to introduce punitive taxes, taxpayers find ways and means of evading and avoiding the tax. So if you have a simplified tax regime it is better and compliance increases. And the evidence is that if you look at our tax-to-GDP ratio well until recently as GRA is claiming, the highest point at which revenue was collected was 2015 per the percentage of GDP, not nominal terms.”
By: Abigail Arthur