The Minister said that while most of us identify failure to pay taxes as peculiar to an “informal sector” that we associate with market traders, hawkers, domestic workers and so on, some of the biggest culprits are lawyers, accountants and big business owners. 

The Minister for Finance, Ken Ofori-Atta, has described as unfortunate the way many Ghanaians criticise governments and accuse them of providing inadequate public services ‒ yet refuse to pay income tax.

And Mr Ofori-Atta called on all Ghanaians to take up the challenge of meeting their civic responsibility by “rendering unto Caesar what Caesar is due”.

Mr Ofori-Atta was speaking on Friday at the Danquah Institute’s Economic Forum in Accra on the theme of “Bridging the Gap Between the Formal and Informal Economy: the Role of Domestic Revenue Mobilisation in an Era of Ghana Beyond Aid”.

He said that while most of us identify failure to pay taxes as peculiar to an “informal sector” that we associate with market traders, hawkers, domestic workers and so on, some of the biggest culprits are lawyers, accountants and big business owners. The most significant tax leakages occur among the “professional” classes, he said.

Fair is fair

“Often when we talk about the informal sector, we look at the woman who sells Kofi brokeman at the roadside, or the one operating out of the container, or the hawker in the street. But really, as far as the taxman is concerned, wearing a suit and having a business card are not the stuff that qualify you as being part of the formal sector,” he said.

The Minister said that although members of the professional classes have ample resources to contribute to nation-building, many refuse to do so by not paying income taxes.

“There are many lawyers out there, accountants, respectable consultants, PhD holders, big businessmen, who simply refuse to declare their incomes,” Mr Ofori-Atta told the packed audience at the College of Physicians and Surgeons.

“They have the resources and knowledge to make their fair contribution but simply refuse to pay their taxes, and yet will shout the loudest on social media and any given forum about how government is failing in delivering public services,” he said.

“Our founding fathers encouraged us to build a nation where every Ghanaian is free and empowered to have access to education, skills and job opportunities in an ever-expanding economy [and] to contribute fully to nation-building and self-enactment in a free and progressive society,” the Minister said. If, as a nation, we want to extend these opportunities fairly across society, that will require all Ghanaians to meet our social obligations by paying income taxes, he argued.

Service debt

Mr Ofori-Atta said he was satisfied that there has been a marked improvement in Social Security and National Insurance Trust contributions, which rose from GHC280 million in 2015-16 to GHC486m in 2018-19. But, he asked: “How many Ghanaians are on SSNIT, or how many Ghanaians who consider themselves responsible citizens do also consider their employees as also worthy of a decent pension and therefore make their SSNIT contributions?”

Close to 55 per cent of Ghana’s tax revenue is consumed by interest payments on the country’s loans, the Minister said.

In 2018 Ghana “raised GHC37.8 billion in tax revenues and spent GHC21.1bn to service our loans – and by that, I mean, interest payments alone”, he said. The less revenue the country generates, the more we have to spend on clearing arrears and interest payments.

The Bank of Ghana’s Summary of Economic and Financial Data released in the first quarter of 2019 showed that Ghana’s debt stock increased by 21.5 per cent as of the end of 2018, adding GHC30.6bn to the GHC142.6bn debt of 2017.

The total debt stock by year end was therefore GHC173.2bn. External debt stood at GHC86.3bn; the domestic component of the debt stock was GHC86.9bn. These two figures are equivalent to 28.9 per cent and 29.1 per cent of GDP, respectively.

Where we stand

The Minister told guests at the DI Economic Forum that Ghana’s domestic revenue collection registered a significant rise from GHC242.8m, representing 11 per cent of gross domestic product, in 2015-16 to GHC452.7m in 2018-19 (13 per cent of GDP).

This has been achieved even though the government abolished roughly 17 nuisance taxes and decided last month to reduce import duties.

“It may be seen as denying the state much-needed revenue. We do not see it that way. We measured the cost of underinvoicing and the cost for retail pricing against the cost of lower duties to the Treasury, and concluded in favour of the latter,” he said.

The Finance Minister observed, “On the whole, taxes here are very low in comparison with those of our peers. Tunisia’s tax-to-GDP ratio in 2018 stood at 29.4 per cent, and South Africa recorded a tax-to-GDP ratio of 28.6 per cent that same year. Ghana’s tax-to-GDP ratio in 2018 was a mere 13.5 per cent, well below the regional average of 15.5 per cent.

“With such low … ratios, we should be concerned about how to move Ghana beyond aid and loans, which are less predictable and costly than tax revenue. It will be unreasonable on the part of responsible Ghanaian citizens to demand economic transformation, if we can’t make domestic tax revenues a significant source of development finance for our country.”

Mr Ofori-Atta urged all Ghanaians to meet their civic obligations by paying their income taxes in a timely manner.

“We want to assure you that my staff at the Ministry of Finance and I will protect the public purse with uncompromising courage, integrity, fortitude and love for country,” he said.

The Minister’s keynote speech at the Danquah Institute event was preceded by a debate featuring the tax academic Ken Ampaabeng, Sister Eugenia Amporfu, associate professor of economics at the Kwame Nkrumah University of Science and Technology, Ken Attafuah, head of the National Identification Authority, Abiola Bawuah of United Bank for Africa, Customs Commissioner Isaac Crentsil and Emmanuel Kofi Nti, Commissioner General of the Ghana Revenue Authority.

In a lively question-and-answer session at the end of the programme market women, researchers, social activists and students put questions directly to the Minister and other speakers.