Unleashing Ghana's Economic Potential: The Case for Low Taxes

No nation on the planet can be successfully transformed if its tax regime isn't a low-tax one – low enough to make taxpayers feel morally obliged to pay their taxes: their nation-building contribution to transforming Ghana into a prosperous society. This statement couldn't be more relevant today, especially after former Stanbic Bank Ghana Limited CEO, Alhassan Andani, labeled the Ghana Revenue Authority (GRA) a "terrorist organization" wriggling people's arms for money [1].

Ghana's tax-to-GDP ratio stands at a dismal 13%, significantly lower than the United Nations recommended 20% required to achieve Sustainable Development Goals (SDGs). The Ghana Revenue Authority's Strategic Plan targets a 17.5% tax-to-GDP ratio, but this remains elusive. To bridge this gap, policymakers have focused on increasing taxes, but this approach may be misguided. Research suggests Ghana's revenue mobilization challenges stem from tax losses due to inefficiencies and a narrow tax base [2].

The Solution: Lower Taxes, Wider Net
- Broaden the tax base: Encourage voluntary compliance through simplified tax processes and education.

- Reduce tax rates: Implement low tax rates, around 3%, to stimulate economic growth and increase taxpayer morale.

- Digitalize tax collection: Leverage technology to minimize tax evasion and optimize revenue collection.

By adopting this strategy, Ghana can:
- Boost entrepreneurship: Low taxes will incentivize private sector growth, driving innovation and job creation.

- Increase revenue: A wider tax net will capture more taxpayers, offsetting losses from reduced rates.

- Foster transparency_: Digitalized tax collection will ensure accountability and minimize corruption.

Empowering Micro-Entrepreneurs and Rural Communities

To further drive growth, we must empower micro-entrepreneurs and rural communities. Partnering with companies like Triad Ghana Limited to establish cassava starch factories across rural Ghana can create jobs and stimulate local economies. This initiative aligns perfectly with Ghana's vision for an integrated agro-industrial green economy. The demand for ethanol, a key cassava by-product, is increasing, with over 60 million liters imported annually.

The cassava sector contributes significantly to Ghana's agricultural GDP, representing around one-fifth of the total. Establishing cassava starch factories will provide a stable market for smallholder farmers' produce, improving their livelihoods.

Key Benefits
- Job Creation:
Establishing cassava starch factories will create employment opportunities in rural areas, reducing poverty and improving living standards.

- Export Boost:
Cassava starch is in high demand globally, providing a lucrative export market for Ghana.

- Economic Growth: This initiative will stimulate local economies, contributing to Ghana's overall economic growth.

The Way Forward
To make this vision a reality, we need to:
- Foster Partnerships: Encourage collaboration between the rural banking sector, private companies, and local farmers.

- Provide Incentives: Offer attractive incentives, such as tax breaks, subsidies, and training programs, to support the growth of private sector-led initiatives.

- Develop Infrastructure: Invest in rural infrastructure, including transportation networks and storage facilities, to support the agriculture and manufacturing sectors.

Recently, Dr. Daniel McKorley, CEO of McDan Group, expressed concerns about the effectiveness of government policies in supporting the private sector [3]. He emphasized that policies like the One District One Factory (1D1F) initiative should be driven by private sector expertise and entrepreneurship to ensure sustainability and success.

Ghana's agriculture sector, which accounts for 21.8% of the country's GDP, has tremendous potential for growth. With the right policies and investments, we can unlock this potential, create jobs, and drive economic growth.

Let's rethink Ghana's tax strategy, prioritize economic growth, and unlock the potential of our agriculture sector.

#GhanaDeservesBetter #LowTaxesForGrowth #GreenEconomy #TaxReformNow #AfricaRising #EconomicFreedom

References:
[1] Ghanaweb. (2024). GRA has become a terrorist organisation, wriggles people's arm for money - Alhassan Andani.

[2] Ghanaweb. (2024). Government policies have really not helped the private sector - McDan laments.

[3] Ghana Statistical Service. (2024). Ghana's Tax-to-GDP Ratio.