Ghana’s Finance Ministry has reported that the country incurred GH₵4.6 billion in tax expenditures in 2023, a slight decrease from the GH₵4.8 billion recorded in 2022.
While this indicates a marginal improvement, the substantial amount of exemptions, particularly import waivers, continues to raise concerns about Ghana’s financial stability and revenue collection.
Tax expenditures, which represent revenue lost due to preferential tax treatments, primarily consist of exemptions on domestic taxes and import duties.
In 2023, import exemptions dominated, accounting for GH₵3.5 billion (77% of the total), followed by domestic indirect tax exemptions (GH₵809 million) and domestic direct tax exemptions (GH₵264 million).
Import exemptions have shown a steady increase, rising from GH₵2.4 billion in 2021 to GH₵3.5 billion in 2023. Parliamentary exemptions comprised the largest portion, totaling GH₵1.7 billion (37% of all tax expenditures and nearly half of import exemptions).
Parliamentary exemptions, granted through parliamentary resolutions, encompass various public and publicly funded projects, as well as benefits for MPs and Council of State members, such as vehicle tax waivers.
In 2023, these exemptions included significant amounts for mining companies, grant-funded projects, the One District One Factory (1D1F) program, and vehicle tax waivers for MPs and Council of State members.
The World Bank has repeatedly urged Ghana to rationalize its import duty waivers, highlighting the negative impact on the country’s revenue base. The NDC minority in Parliament has also criticized certain waivers, particularly those under the 1D1F initiative, arguing that they disproportionately benefit a select few.
Despite the rising value of import exemptions, their share of total tax revenue has decreased from 5.7% in 2018 to 3.14% in 2023. The Finance Ministry attributes this to a more efficient exemption system, fewer project-related disbursements, and improved revenue collection.
However, tax expenditures remain a significant drain on public funds, presenting a challenge for the government as it balances investment incentives with revenue preservation.
