By Enoch 
Leadership and governance expert, Professor Stephen Adei, has made a compelling case for a comprehensive review of Ghana’s tax system, describing the current structure as excessive and counterproductive. His call for reform comes in the wake of his recent experience with the country’s tax regime, which he found to be riddled with numerous and often redundant taxes.
Excessive Taxes on Car Imports
Professor Adei highlighted the issue of car imports, where he encountered an astonishing 21 different taxes. He described this as “ridiculous” and argued that such a convoluted tax system not only burdens importers but also stifles economic growth. “There should be a total tax review. There are too many taxes. For example, I imported something and I saw about 21 taxes on our car import, that is ridiculous,” he stated.
Streamlining the Tax System
Adei’s proposal for a streamlined tax system focuses on efficiency and broadening the tax base. He emphasized the need for taxes that are easier to collect and more widespread, thereby reducing the burden on a small segment of the population. “There are only about one million income taxpayers in Ghana out of 33 million people of which half are adults. That is why the e-levy, if it can be reduced, should be kept, then you must go for property taxes because you cannot put your house in your pocket,” he explained.
The Case for Property and Sin Taxes
In addition to advocating for property taxes, Professor Adei also addressed the issue of “sin taxes” on activities such as betting. He criticized plans to scrap the current 10% tax on betting winnings, arguing instead for a significant increase to 50%. He described such taxes as a moral imperative to curb harmful practices. “As a father and a Christian leader, we call these ‘sin taxes.’ Sin taxes—such as those on cigarettes, alcohol, and betting—should be higher, not reduced. Globally, these taxes are elevated to discourage destructive habits,” he asserted.
Public and Political Reactions
The call for a tax overhaul has sparked a wide range of reactions from both the public and political spheres. Many Ghanaians have expressed support for Professor Adei’s proposals, seeing them as a necessary step towards a more equitable and efficient tax system. However, there are also concerns about the potential impact on various sectors of the economy and the feasibility of implementing such sweeping changes. Critics argue that while the idea of broadening the tax base is sound, it must be done in a way that does not disproportionately affect the lower-income population.
Challenges and Future Prospects
Implementing a comprehensive tax review will undoubtedly face several challenges. Ensuring that the new tax system is fair, efficient, and transparent will require careful planning and consultation with various stakeholders. Additionally, there will be a need for robust enforcement mechanisms to prevent tax evasion and ensure compliance. Stakeholders in the business community, for example, have expressed concerns about how new tax policies might impact their operations and profitability.
Despite these challenges, the potential benefits of a streamlined tax system are significant. By broadening the tax base and reducing the burden on a small segment of the population, Ghana can create a more sustainable and inclusive economy. Professor Adei’s proposals offer a roadmap for achieving this goal, but their success will depend on the willingness of policymakers to embrace change and work collaboratively towards a common vision.
International Perspective
Looking beyond Ghana, many countries have successfully implemented tax reforms that broaden the tax base and streamline the tax collection process. Lessons from these nations can provide valuable insights for Ghana as it embarks on its own reform journey. For instance, countries that have effectively implemented property taxes have seen improvements in public infrastructure and services funded by these revenues. Similarly, higher sin taxes in other nations have led to decreased consumption of harmful products and increased public health benefits.
Last Words…
Professor Stephen Adei’s call for a comprehensive tax overhaul in Ghana highlights the urgent need for reform in the country’s tax system. His proposals for streamlining taxes, broadening the tax base, and increasing sin taxes offer a clear path towards a more efficient and equitable system. As Ghana moves forward, the implementation of these reforms will be crucial in ensuring sustainable economic growth and development. The success of these reforms will hinge on transparent implementation, public support, and continuous evaluation to adapt to changing economic conditions.
What are your thoughts on Professor Adei’s proposals?