Economic Forum Advocates Tax and Energy Reforms | By Albert Ennin | The intertwined issues of inefficiencies in the energy sector, the urgent need for tax reforms, and enhanced revenue mobilisation strategies are central to discussions at the ongoing National Economic Forum.
Speakers at the two-day National Economic Dialogue 2025 underway in Accra, say these issues are crucial for restoring economic stability in Ghana.
Ghana’s Finance Minister, Dr Cassiel Ato Forson, described the current VAT regime as distorted and leading to minimal compliance. “Last year, the Ghana Revenue Authority (GRA) aimed for a 32% increase in VAT revenue but achieved only 17%, far below inflation levels. This indicates a significant problem.”
He underscored the essential need for tax rationalization while minimizing the impact on vulnerable populations, calling for immediate VAT reforms to bolster revenue mobilization and ensure fairness across all economic sectors
Dr Forson said the VAT on real estate needed to be revisited. The previous administration suspended it in the lead-up to the 2024 general election. “VAT on dwellings and real estate was introduced in 2022 by the previous administration but was abandoned as the 2024 elections approached. While the tax still exists, it was put aside post-elections, highlighting the urgent need to close this gap.”
ECG’s inefficiencies drag the economy
Another major issue keenly being discussed is how to restructure the energy sector and set it on the path to self-sustainability without the need for the government to consistently pump
millions of cedis into the operations of major entities such as the Electricity Company of Ghana (ECG).
“If we do not act now, ECG will cripple Ghana’s economy. We cannot continue pouring billions into a broken system,” Dr Forson stated.
The ECG is only able to collect the cost of 62% of the electricity it distributes from the consuming public. This alarming statistic means that nearly 40% of all supplied power is either lost or remains unpaid, creating a substantial revenue gap.
Over the last two years, the central government has had to transfer some US$2.1 billion to ECG to sustain its operations and help it meet its financial obligations. “The inefficiencies at ECG are costing the nation heavily. Government transfers to support the energy sector have reached unsustainable levels, yet the company continues to struggle with revenue collection and operational inefficiencies. The power sector should be a key driver of industrial growth, but instead, it has become a financial black hole, dragging the entire economy down.”
The National Economic Dialogue was instituted by the John Mahama-led government as a platform for policymakers, think tanks, business leaders, and academia to deliberate on the way forward for an economy in distress.
Economic Forum Advocates Tax and Energy Reforms | AviationGhana
