The Finance Minister Ken Ofori-Atta has described the government’s revenue target set over the past four years as somewhat over-ambitious given that tax compliance has generally not performed beyond expectations.
The government’s revenue target for July 2019 fell short by GHS5 billion; prompting concerns from the International Monetary Fund (IMF) that the government needs to enhance revenue collection or it may have to cut its spending to keep the deficit in check.
But speaking on Citi TV’s Point of View with Bernard Avle, Mr. Ofori-Atta said that among the reasons for the revenue shortfalls is the fact more people are not paying the right taxes and as a result, the set targets appear overly ambitious.
“We are in tough times. Maybe you and I are not paying the taxes we should be paying; maybe I was too optimistic with regards to my revenue projections. Be that as it may, I think revenue has gone up on average between 15-20 percent each year since 2017.
Even in these doldrums, we are up by 11 percent compared to last year. But we are certainly missing our targets and we need to do something about that. That is clear to all of us especially the new leadership that we have brought to the GRA. We’re truly expecting great things from the people we have put in place,” he said.
The government in June this year undertook some structural reforms at the tax-collecting agency where the three Commissioners for Domestic Tax collection, Customs Division, and Support Services Division were all rotated.
Additionally, more than 1,400 GRA personnel had their posts changed in a bid to provide the needed boosts to revenue collection. A new GRA Board Chair in the person of Prof. Steve Adei has also been appointed to spearhead revenue growth.
Despite these measures, the government could still not meet the GH¢31.8 billion (9.2 percent of GDP) revenue target it set for July 2019; only raising GH¢26.8 billion (7.7 percent of GDP).
The Finance Minister admitted that one of government’s key objectives for establishing the Nation Builders Corps which was to use recruits to drive tax compliance has not been met.
About 10,000 of the initial 100,000 recruits were supposed to help the Ghana Revenue Authority to mobilise domestic revenue especially in the large informal sector but given the revenue shortfalls, the Finance Minister admitted their role has not played out well.
“I am not sure the strategy was implemented the way we wanted it and that’s why there was a change of leadership at the revenue authority…but I am sure we will ultimately reap the results of this initiative,” Mr. Ofori-Atta added.