Economist calls for rigorous reform of Ghana's tax incentives regime

Economist, Dr Gloria Afful-Mensah, has called for a comprehensive review of Ghana’s corporate tax incentive regime to plug revenue leakages.

She said that Ghana’s tax incentive regime measures must be strictly justified by clear economic benefits and robust cost-benefit analyses.

She was speaking in an interview on the sidelines of a Tax Dialogue organised by the Media Foundation for West Africa which spotlighted the study on Tax gap, illicit financial flows and revenue mobilisation in Ghana.

Dr Afful-Mensah stressed that while tax incentives could be useful policy tools, their deployment in Ghana required greater discipline and purpose to ensure that they delivered tangible returns for the national economy.

“I wouldn’t say that tax incentives are not good. But the point here is that we need to always do a cost benefit analysis, so that the incentives that we get will be clear and convincing,” Dr Afful-Mensah stated.

She highlighted a critical need for accountability, questioning whether current incentives were yielding their intended outcomes.

“We give incentive for a purpose. So we need to ask ourselves, the various incentives that we have in our corporate income tax, are we generating the benefit from it?” She asked.

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The economist cautioned against loopholes that enable aggressive tax avoidance, a situation where businesses exploited incentives like tax holidays without generating lasting domestic value.

She observed that in some cases, just when those tax holidays are ending, they will shift into something else.

This practice, she noted, underscored the necessity for well-designed, targeted, and monitored incentive structures that align with national development goals rather than offering broad, easily exploited incentives.

She urged policymakers to urgently commence auditing of existing tax expenditures and instituting a more transparent, evidence-based framework for granting future corporate tax incentives.

Sulemana Braimah, Executive Director of the Media Foundation for West Africa (MFWA), underscored the severe economic cost of tax irregularities in Ghana.

He said substantial tax gaps and illicit financial flows (IFFs) were draining national resources, directly undermining the country’s development potential.

These revenue shortfalls, he noted, had dire consequences, particularly for lower-income groups and underserved communities which rely most on public services like healthcare and education

Braimah emphasised that the failure to mobilize domestic revenue efficiently and equitably limits the government’s ability to invest in essential services.

“This erosion of the tax base does not only compromises living standards but also weakens public trust in the governance system,” he said.

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