Ofosu-Dorte urges GRA Boss to refrain from increasing tax revenues based on IMF targets

David Ofosu-Dorte, a senior partner at AB & David Africa, has advised Anthony Sarpong, the Commissioner-General of the Ghana Revenue Authority (GRA), to focus on developing long-term, sustainable tax policies instead of simply striving to meet revenue targets set by the International Monetary Fund (IMF). Speaking on the Citi Breakfast Show, during a discussion titled “30 Days into Mahama’s Government: What Have We Learned So Far?”, Ofosu-Dorte shared his perspective on the need for a balanced approach to fiscal policy and the management of the country’s tax system.

While acknowledging the competence and leadership of Anthony Sarpong at the GRA, Ofosu-Dorte stressed that the Commissioner-General’s primary focus should not be on meeting IMF revenue targets but on expanding the country’s tax base and exploring alternative sources of revenue. He cautioned that an over-reliance on IMF-imposed targets could undermine the country’s long-term economic health and stability.

Ofosu-Dorte explained that rather than solely pushing to increase tax collections to fulfill IMF conditions, the focus should be on broadening the number of individuals and businesses contributing to the national revenue. By expanding the tax base and identifying new ways of generating income, Ghana can ensure its economic growth is both sustainable and self-sufficient. The current practice of meeting IMF targets, he argued, might lead to short-term fixes that do not address the root causes of revenue shortfalls or the structural weaknesses within the economy.

In his commentary, Ofosu-Dorte pointed out that an economic strategy centered solely around the IMF’s goals does not necessarily align with Ghana’s broader, long-term development needs. He urged the government to be cautious about making its fiscal policies dependent on external bodies such as the IMF. Instead, he suggested that Ghana should focus on setting its own revenue and expenditure targets that reflect the country’s unique economic context and aspirations.

“The focus should be on increasing the number of taxpayers and finding new revenue streams rather than just meeting the IMF’s revenue targets,” Ofosu-Dorte said. He further added that meeting these targets at the cost of economic sustainability could lead to undesirable consequences down the line. “I don’t understand how we plan our entire economic future around targets set by the IMF. As a nation, we must set our own targets, and those targets should include reducing government expenditure as well,” he emphasized.

According to Ofosu-Dorte, while it is essential for Ghana to have a clear understanding of its revenue needs, it is equally important to manage public spending efficiently. He explained that over-reliance on external bodies like the IMF for fiscal guidance could potentially limit the country’s flexibility to make independent decisions about its own economic direction. “It’s not just about raising revenue; it’s also about managing expenditures,” Ofosu-Dorte clarified, urging the government to adopt a more holistic approach that addresses both sides of the fiscal equation: increasing revenue and reducing unnecessary government spending.

The expert also highlighted that improving tax compliance and enforcement should be prioritized to ensure the sustainability of the tax system. Expanding the formal economy and reducing the informal sector, where tax evasion is prevalent, would help increase government revenue without the need to raise tax rates for everyone. He stressed that fostering a culture of tax compliance among Ghanaians should be a cornerstone of any tax reform efforts moving forward.

Ofosu-Dorte concluded by emphasizing the importance of long-term economic planning and diversification. He suggested that the government should look beyond meeting short-term IMF targets and focus on creating a sustainable, robust economy that is not heavily dependent on external entities. By fostering a broad-based, self-sustaining economy, Ghana could ensure its fiscal policies align with both the country’s development goals and the aspirations of its citizens.

Ultimately, Ofosu-Dorte’s advice centers on the need for Ghana to take control of its economic future, setting its own priorities and working towards a tax system that is fair, inclusive, and capable of generating the necessary revenue to drive growth while maintaining fiscal discipline.