The Director of the Institute for Statistical, Social and Economic Research (ISSER), Professor Peter Quartey, has raised concerns over Ghana’s current tax system, describing it as counterproductive and skewed in favor of tax evasion and corruption.

Speaking at the Graphic Ecobank Economic Forum, Prof. Quartey argued that the imposition of high taxes on businesses and individuals in a bid to meet revenue targets is encouraging widespread evasion, benefiting only a few at the expense of national development.

“Our tax levels are too high, in my view,” he stated. “VAT, for instance, is over 21%, and some components are straight levies on which businesses cannot even claim input tax. In comparison, our competitors are charging 15% or 18%.”

According to him, the structure of Ghana’s tax system is fueling a culture of non-compliance, as businesses and consumers seek ways to escape the excessive burden. He warned that this has created fertile ground for collusion between tax collectors and business owners.

“When your taxes are too high, you end up enriching customs officials and businessmen who conspire to evade taxes, while the government struggles to raise revenue,” Prof. Quartey emphasized.

Informal Sector Neglected

Prof. Quartey also noted that Ghana’s largely informal economy—estimated to make up over 80% of total economic activity—complicates tax collection efforts. He criticized the government’s over-reliance on the formal sector, which comprises only about 20% of the economy, calling it an unfair approach.

“All we do is focus on the 20% of workers in the formal economy. Why overtax them and ignore the 80%?” he questioned.

Rethinking VAT and Tax Strategy

As a solution, the ISSER Director called for a comprehensive review of Ghana’s Value Added Tax (VAT) regime and a broader engagement to integrate the informal sector into the national tax system. Without reforms, he warned, the country would continue to fall short in domestic revenue mobilization.

“If we don’t critically examine our tax structure, particularly VAT, we will keep borrowing because we are not raising enough internally,” he cautioned.

He also dismissed the notion that higher taxes automatically lead to improved tax-to-GDP ratios, pointing out that Ghana lags behind several African peers.

“Our tax-to-GDP ratio stands at around 14%, while other African countries are achieving between 18% and 23%. That shows the risk inherent in our current approach.”

Call for Transparent Revenue Use

Prof. Quartey concluded by emphasizing that tax compliance could improve if citizens witnessed tangible and efficient use of public funds.

“It’s not just about collecting taxes. We must also use the revenue transparently and effectively to advance national development. That is how we build trust and encourage voluntary tax compliance,” he said.