13.1% GDP ratio quite alarming – SEND-Ghana

Business News of Tuesday, 4 December 2018

Source: www.ghanaweb.com

2018-12-04

play videoCountry Director of SEND-Ghana, Dr. Emmanuel Ayifah

With a worldwide median tax-to-GDP expectancy ratio hitting 26.2%, that is, 19.1% in Africa, 22.8% in Latin America and 34.3% in the OECD, the 2019 projected tax to GDP ratio of 13.1% is quite alarming, SEND-Ghana has stated.

A review by SEND-Ghana stated that although the Ghanaian economy has witnessed an increase in tax revenue, the growth is a slow process.

The forum was in response to the Ministry of Finance’s 2019 budget statement, which was presented in Parliament in November, this year.

“The ideal is that in Africa, the benchmark is around 19% and if for the 3-year-period (2016-2018) and we have not been able to achieve the 19 threshold for Africa, not to talk about the median (26%) worldwide, that means that we still need to try and do more in our revenue generation.” Country Director of SEND-Ghana, Dr. Emmanuel Ayifah, stated in a presentation.

He articulated that government, in its budget, have come out with many of “ambitious” plans and policies, the most important aspect is to put it into practice.

Dr Ayifah explained that, “If you look at our proportion to GDP, it is not encouraging”.

He partially blamed the country’s deficit surge on the over 70% informal sector who do not pay tax.

The analysis disclosed that Ghana’s revenue (58, 904, 864, 627) and expenditure (73, 440, 768, 495) differences totaled GHC14, 535, 903, 869 (deficit) from 2017 – 2019.

“The deficit situation points to low revenue mobilization and this situation is quite worrying, since government may have to resort to deficit financing measures which is likely to increase the already high debt to GDP ratio.”

SEND-Ghana, therefore, recommended that there is the need for an urgent strategy by government to find innovative ways of generating domestic revenue such as mobilizing through technology.

However, the NGO welcomed governments proposed tax reforms which is aiming at roping in more people into the tax net and reducing loopholes or leakages in revenue mobilization.

SEND-Ghana, presented its views on the 2019 Budget pointing out some key cross-sector and sector-specific concerns which the organization believes needs urgent attention.

The concerns raised were on overdependence on donor funding, fragmentation and weak governance, low allocations to goods and services, the issue of inequality, among others.

The NGO gave its assessment on various sectors such as education, health, agriculture, water and sanitation as well as child protection and welfare.

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