Ghana’s tax collection is low compared with other lower-middle-income countries in the sub-region. Non-compliance with tax payments is a major issue in Ghana and has reflected in the widening fiscal deficit and a rising debt burden.
Ghana’s tax collection is low compared with other lower middle-income countries in the sub-region. Non-compliance of tax payments is a major issue in Ghana and has reflected in the widening fiscal deficit and a rising debt burden.
Nonetheless, the Internal Generated Funds (IGF) landscape of Metropolitan, Municipal and District Assemblies (MMDAs) is plagued with structural, administrative and systematic inefficiencies which undermine the ability of MMDAs to realize the full potential of local revenues. A worrisome situation is the over-reliance of MMDAs on central government transfers, to the apparent neglect of improving locally generated revenue. Available figures for 2013 to 2016 indicate that IGF accounted for an average of about 18% of MMDAs’ total revenue (18% in 2013, 17% in 2014, 18% in 2015 and 19% in 2016). This excludes transfers for compensation of employees from the central government. The 2013 revenue data indicated that in some MMDAs, the monthly collections by permanent revenue collectors were not enough to pay the salaries they received each month.
These challenges gave birth to the Domestic Revenue Mobilization through Citizen Engagement project which aims to develop innovative approaches to improve transparency and progressivity of DRM, inclusion in public spending to reduce poverty and inequality at national and local levels and secondly to improve the fiscal and influencing capacity on DRM approaches.
Overall FOSDA and OXFAM are collaborating on this project to support national tax policy and administration reforms, build capacity for subnational revenue mobilization and to ensure that revenue management is inclusive. So far, the project has contributed to the establishment of the DRM Champions; Revenue Improvement Action Plans (RIAP) for target district; National DRM Dialogues and pro poor monitoring activities. The year 2021 is a year of broad-based Tax Automation Advocacy.
Domestic Revenue Mobilization (DRM) is at the heart of achieving the Ghana Beyond Aid Agenda.