By Issah Mohammed, GNA
Accra, Nov. 6, GNA – The Institute of Fiscal Studies (IFS) has proposed increased state participation in the extractive sector, stronger measures to tackle revenue leakages and a comprehensive review of tax exemptions to address Ghana’s low domestic revenue mobilisation.
It said the country needed to move beyond relying mainly on conventional taxation and improve the returns it obtained from its natural resources, while strengthening accountability in revenue collection.
In a press briefing on the Institute’s policy brief titled “A Reexamination of the Low Government Revenue Mobilization in Ghana“, Dr Boakye Said, Executive Director of the IFS identified three major constraints to domestic revenue mobilisation.
“Three main factors causing the poor revenue mobilization in Ghana are low extractive revenue generation, revenue leakages, and excessive use of tax exemptions to attract investors,” he said.
The brief said Ghana’s total revenue and grants amounted to 15.7 per cent of Gross Domestic Product (GDP) in 2022, ranking the country 18th among 25 Sub-Saharan African countries examined, against a regional average of 20.1 per cent.
“The direct implication of the low total revenue and grants to GDP ratio is that the government of Ghana is actually collecting revenues in monetary terms far below its potential,” Dr Said said.
Using the 2025 revenue-to-GDP ratio of 15.7 per cent, the Institute estimated that Ghana’s total revenue and grants of GH¢224.88 billion could have reached GH¢288.26 billion if the country had mobilised revenue at the regional average.
That would have represented an estimated additional US$5.05 billion.
The IFS said the estimate illustrated the scale of Ghana’s revenue mobilisation gap and should not be interpreted as revenue that the country had automatically lost or could immediately recover.
On the extractive sector, Dr Said called for a more active role for the state through direct investment and strategic partnerships to enable the country to capture a greater share of the economic value generated from its natural resources.
“The government of Ghana should get actively involved in the country’s extractive sector by directly investing heavily in the sector,” he said.
The Institute said Ghana’s mining revenue as a proportion of mining value added averaged 15 per cent between 2019 and 2023, compared with 60.9 per cent in Botswana over the same period.
In 2025, Ghana’s mining value added was estimated at US$13.40 billion, while mining revenue amounted to US$1.60 billion, representing 11.9 per cent of mining value added.
Applying Botswana’s average ratio to Ghana’s 2025 mining value added would have produced an estimated US$8.16 billion in mining revenue, about US$6.56 billion above the actual figure.
The Institute said the comparison highlighted the need to reconsider how the state participated in the exploitation of mineral resources and secured returns from the sector.
It proposed that government consider redirecting some resources from traditional public investment programmes, particularly certain infrastructure projects, towards strategic investments in the extractive sector.
Where direct state investment was difficult, it recommended production-sharing arrangements as an alternative means of securing a greater share of the benefits from resource exploitation.
On revenue leakages, the IFS cited the April 2026 disclosure by the Commissioner-General of the Ghana Revenue Authority (GRA), Mr Anthony Sarpong, that more than GH¢11 billion had been lost at the ports.
The reported leakages were linked to irregularities involving declarations of countries of origin, classification of goods and valuation.
The Institute said the reported use of the Publican AI system to uncover collusion within the import clearance chain demonstrated the importance of technology in detecting irregularities.
Dr Said said tackling corruption and revenue leakages required a combination of incentives and sanctions.
“The government should apply what is known as the ‘carrot and stick’ approach, whereby revenue collection agencies and their personnel are rewarded for their good actions but punished swiftly for their bad actions when carrying out their duties and functions as revenue collectors,” he said.
The Institute also called for stronger institutional controls, improved monitoring and measures to close loopholes that allowed manipulation of the revenue collection process.
On tax exemptions, the IFS urged government to conduct a comprehensive assessment of existing incentives to determine whether their economic benefits justified the revenue forgone.
It noted that Ghana operated several incentive regimes, including those under the Free Zones Act, 1995 (Act 504), and incentives for the automotive industry.
The Ghana Investment Promotion Centre’s incentives inventory, it said, identified 31 packages covering income tax, customs and financial incentives.
Dr Said said government needed to assess the economic benefits of the incentives against the revenue it forfeited.
“The government should conduct a thorough review of all existing tax incentive packages with the goal of getting rid of those that do not make economic sense in terms of government revenue lost vis-à-vis variables such as employment creation for Ghanaians and foreign exchange inflows that support the cedi,” he said.
The Institute said incentives that failed to generate benefits commensurate with their revenue costs should be reconsidered or removed.
It also urged government to reduce excessive reliance on tax concessions as a means of attracting investment, and instead strengthen the fundamentals that influenced investment decisions, including macroeconomic stability, infrastructure, political stability and the regulatory environment.
The IFS said improving domestic revenue mobilisation requires more than introducing new taxes or increasing existing rates.
It called for a broader strategy that improved the state’s returns from natural resources, prevented revenue losses and ensured that tax incentives delivered measurable economic benefits.
The Institute said the reforms were necessary to strengthen Ghana’s domestic revenue base and support the financing of public services and development priorities.
GNA
Edited by Kenneth Odeng Adade