An international resource revenue governance expert has described as worrying the reduced effort by Ghana at revenue mobilization since the beginning of commercial oil production.
Ian Gary, Director of Accountable Development Finance at global charity Oxfam, said Monday the government and its stakeholders needed to devise means of increasing domestic revenue mobilization to support national development.
He was speaking in an interview with Xinhua after discussions with resource think tank Africa Center for Energy Policy (ACEP) on developments in Ghana and Africa resource extraction sector and the role of civil society.
Gary observed that as soon as most resource-rich African countries started getting revenue from oil, gas and mining, they tended to reduce their efforts to collect taxes from other sectors of the economy.
“We are seeing that phenomenon happening in Ghana now where the percentage of tax-to-GDP ratio has gone down and it’s not caught up with its peers,” Gary noted.
Ghana expects to announce new size of its economy after rebasing later this year. The previous rebasing announced in 2010 lifted the country to a lower-middle-income status. But revenue to gross domestic product (GDP) ratio was pegged below 17 percent in 2017.
The official urged civil society on the African continent to start looking at how the tax system worked in terms of the composition of taxes and whether the tax system was promoting inequality or equality.
“There must be ways designed to raise revenue such that they do not put the burden on the backs of the poor,” he stressed.
Beyond the simple answers such as increasing consumption taxes including Value Added Tax (VAT), Gary noted that more complicated and more equitable approaches such as closing tax loopholes, and going after large multinationals and indigenous companies that might be avoiding tax payment could be adopted.
For revenue mobilization and utilization to meet the needs of citizens, Executive Director for ACEP Benjamin Boakye underscored the need for civil society to look at how the revenues were spent.
Fiscal governance of what countries receive from the extraction of their resources he insisted must not be left entirely to only elected and appointed officials to decide on.
Boakye said citizens must be able to track the projects and the governance processes, ensuring that there were competitive tendering processes for projects that were delivered on the back of oil and mineral revenues.
“So that tracking mechanism ought to exist. Civil society needs to build that capacity to be able to analyze contracts, to be able to analyze project delivery and also track and engage citizens to ensure that we can be prudent in the way we utilize resources,” he told Xinhua.