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World Bank asks Ghana to expand tax base as country faces debt distress

Dr. Henry Kerali

While the International Monetary Fund has projected Ghana’s GDP growth to be the fastest in the world in 2019, growing at 8.8 per cent, the country is among 11 on the continent that are at high risk of debt distress, according to the  Economic Report on Africa 2019.

Ghana’s debt is hovering around 60 per cent of GDP.

The World Bank, therefore, believes a broadened tax base would potentially increase domestic revenue.

During a press briefing in Accra, the Bank said the government should make efforts at taxing property and the informal sector, an area that is primarily undertaxed.

“I know examples that have been mentioned before include property taxes, where collection rates are extremely low. In some Municipalities, they don’t even collect property taxes, but around the world, this is a major source of revenue for public purse”, Henry Kerali, outgoing World Bank Country Director said.

Additionally, the Bank suggested a shift of focus to other sectors of the economy, aside the extractives. It said an efficient agricultural system and ICT for productivity could do more in efforts to broadening the economy.

“Some of the potential areas, probably the most with the highest potentials are agriculture. There is also potential in the ICT. We are calling it a digital moonshot. Which is, we really need to try to drive to the digital economy, so that you have systems, government services and so on, that are enabled to work on electronic systems,” Dr. Kerali said.

The Bank noting that there has been significant growth, pointed out that the country has been able to also significantly reduce poverty.

The Bank also noted that revenue in the non-oil sector is picking up and that future growth would mean a lot more investment in this sector.

By Gifty Danso

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One comment

  1. Instead of pointing to the need for an industrial revolution, they are asking for broadening of tax base and to tax property! They mean using taxing houses for example as means of generating revenue which is wasted of a few public servants and politicians, not addressing the fact that it will worsen the already terrible housing challenges and we will end up having many people living on the streets and in slums.
    Tax is good for nation building but why not target profit rather than taking more money from somebody who has acquired a property after task! What they refuse the also address is the fact that houses for instance have no water, no drainage systems, no access roads but they still want to reap where they have not sown.
    For now, anything near absolute capitalism will just worsen the situation of many who are close to or below the poverty line.
    Not the real solution that we need!