Dr Sarkodie urges focus on growing GDP to generate more tax revenue

He said that for a middle-income country such as Ghana, the annual tax revenue projection should be about 2.5 times the real GDP rate projections for the year, which he proposed should be between five and 10% if it is to be sustainable.

Dr Sarkodie also suggested that government focus attention on the fastest growing sectors of the economy for taxation if it wants to raise revenue.

These include the service sector, the industrial sector and the agricultural sector.
In his estimation, the telecommunication sector and the extractive sector should see more taxation.

To do this, he suggested that government leverage on its digitization and digitalization agenda to raise revenue.

This, he stated can be done in the areas of road tool collection and the payment of property rates, for example.

He said, “We should leverage the digitization and digitalization to raise revenue. A typical example is the road toll. I’m sure some of you came to the University of Ghana for the e-card.  That’s digitization to get revenue.”

“Property rates – if you go to somebody’s house to collect property rates, it shouldn’t be by cash it should be by maybe a short code by the Ghana Revenue Authority. Once the person pays through mobile money or pays online, then it goes directly to the GRA.

“The essence of this is to reduce the intercessor phase because the more people you have in between, the more corruption you may experience. We know the example of the paperless programme at the port by Government. It’s making a lot of inroads, so let’s marry digitization and revenue collection.”

In his estimation, government should be able to generate about two percent of GDP from the collection of property rates alone, which should amount to about GH₵16 billion in additional revenue for the state.

He again advised the handlers of the economy to narrow gap between revenue and expenditure so the nation can have positive primary balance, and slow down the accumulation of debt.

Dr Sarkodie made the above suggestions while speaking at an economic forum organized by Danquah Institute, under the theme, ‘Restoring macroeconomic stability and sustainable economic growth: our collective responsibility,’ at the Institute for Statistical, Social and Economic Research on Friday.

To increase tax compliance, he further suggested that citizens’ access to some public services like acquisition of passports and driver’s licenses be tied to their possession of a tax certificate.

Research fellow at the University of Ghana, Dr Kwadwo Opoku, who touched on the management of the national currency, the cedi, versus its trading partners, was of the view that it had been mismanaged over the years, leading to artificial stability and a false sense of economic worth.

He noted that the value of goods imported into the country between 2011 and 2020, the value of imports into the country only grew by about 0.3 percent annually.
However, in 2021, the value of the same volume of imports grew by about 19%, while in 2022; it grew by a whopping 64%.

He wondered how the state was going to get forex to sustain this development.
This his he said had largely contributed to the sharp decline of the cedi. A development he has gladly welcomed. He therefore urged government to allow the system to correct itself.
Dr George Domfeh, who spoke on the development of the local economy held the view that there is the need to establish committees that will focus on developing medium term import substitution plans.

These committees will be made of players in key industries like agriculture (rice) who will come up with a roadmap that will lead to the eventual abolishment of products that can be developed here.

In his opinion, “this will create jobs that will lead to tax payments [that will increase domestic revenue.]”

Dr Agyapomaa Gyeke-Dako, of the University of Ghana Business School, said there was the need to find a middle ground between fiscal and monetary policy, as the attempts by the central bank to control inflation through the policy rate hadn’t succeeded.
She called for government to abandon its interests in the numerous loss making state-owned enterprises, as well as other state-controlled bodies like the public universities, whom she believes, given free reign can thrive on their own.

She was of the firm believe that jettisoning these bodies would reduce the government’s deficit by about 20%.
Dr Agyapomaa said, “many SOEs can stand on their own. Why aren’t we doing that? Their debts shoot us up from 80%of GDP to 100%. Universities can stand on their own if they are allowed to charge realistic fees. This will ease the burden on government.”
As a means of strengthening the cedi and controlling inflation, she said there is the need to make a conscious to produce what we eat, as over 55% of vegetables, grains and cereals consumed in the country are imported.

She further highlighted that Ghana’s transport network has never been great for people in the rural areas, with attention usually focused on the urban areas. This has compounded the issue of inflation as transport cost accounts for a big chunk of the cost of goods.
A lecturer with the Department of Distance Education, Dr Ama Boafo-Arthur, said there was a need to consolidate social protection schemes, as “they are the foundation for a safe and sustainable living.”

According to her, social protection schemes are “especially necessary in times of crisis.” In her opinion, “citizens need to understand that these things go beyond what government can do for us,” and there was therefore the need to place a lot of emphasis on educating our people.”