Ghana’s weak tax collection threatens development funding, ISSER warns

Ghana’s weak tax revenue mobilisation is limiting the government’s ability to finance development and could increase pressure for further spending cuts, the Institute of Statistical, Social and Economic Research (ISSER) has warned.

The institute says the government needs to broaden the tax base rather than place additional pressure on people and businesses already within the formal tax system.

Presenting ISSER’s State of the Ghanaian Economy Report 2025, its director, Professor Robert Darko Osei, said Ghana’s revenue effort remained below the sub-Saharan African average.

“What it then points to is the need for bringing more into the tax net as it were, so that the revenue effort can be improved,” he said.

The warning stresses a financing challenge as Ghana seeks to build on its fiscal improvements in 2025: how to support development while maintaining control over public spending.

According to ISSER’s assessment, much of the improvement in the country’s fiscal position came from expenditure consolidation rather than a substantial increase in revenue mobilisation.

Revenue and grants remained broadly unchanged as a share of gross domestic product (GDP), while spending restraint accounted for much of the adjustment.

That leaves the government facing a difficult balance between maintaining those gains and finding resources for infrastructure and other development priorities.

Professor Osei called for a review of spending priorities alongside efforts to strengthen domestic revenue collection.

His argument places the emphasis on widening participation in the tax system.

He also warned that Ghana’s planned economic rebasing could push the tax-to-GDP ratio lower unless revenue collection increases alongside the measured size of the economy.

Professor Osei also pointed to Ghana’s relatively high average tariff rates compared with other countries in the sub-region, reinforcing his call to broaden the domestic tax base.