Former Finance Minister and renowned tax expert Seth Terkper has issued a strong appeal for the simplification of Ghana’s tax regime, warning that the increasing complexity and distortions in the Value Added Tax (VAT) system are undermining national revenue goals.
Speaking at the launch of his new book “Value Added Tax in Africa: The Ghana Experience” in Accra, Mr. Terkper argued that simplifying VAT—as well as income tax, excise duty, and import tariffs—would enhance compliance and improve Ghana’s tax-to-GDP ratio, which remains significantly below target.
He cautioned that the layering of various levies onto the core VAT system has eroded its original structure and clarity. “Keep it simple, don’t make it complex. If the tax system is simple and broadened, compliance is easy,” he urged, noting that the effective VAT rate, now around 22%, is weighed down by numerous additional charges.
Citing findings from a 2024 study co-authored by Ghana’s Finance Ministry and the UK-based Institute for Fiscal Studies, Mr. Terkper lamented Ghana’s tax-to-GDP ratio of 13.8% in 2022—well below the government’s target of 18–20% by 2027. He warned that such inefficiencies in revenue mobilisation ultimately force the country into unsustainable borrowing.
He acknowledged the necessity of emergency levies in times of national crisis, like the COVID-19 pandemic, but called for more strategic reliance on stabilisation mechanisms rather than ad-hoc taxes that complicate administration.
“If the revenue is distorted, we won’t have sufficient money, and expenditure suffers. That leads to borrowing and debt,” he said in response to a question from the Ghana News Agency.
Also speaking at the event, former Chief of Staff Julius Debrah praised the book’s relevance and called for a national dialogue on meaningful tax reform. He criticised some Ghana Revenue Authority (GRA) practices, pointing to strained relations with the business community and stressing the need for improved public education on taxation.
Tax expert Abeku Gyan-Quansah, who reviewed the book, said it presented a balanced and practical perspective on the evolution of VAT in Ghana. He noted that the book’s release coincides with plans for a major VAT overhaul in September and urged policymakers to draw on the insights presented.
Marking three decades since VAT’s introduction in Ghana, the book provides a timely resource for tax professionals, students, and policymakers across Africa, as debates intensify over how to future-proof the continent’s tax systems for development.
