Finance Minister Dr. Cassiel Ato Forson has underscored the urgent need to reform Ghana’s Value Added Tax (VAT) system comprehensively.
He said the current structure places an excessive burden on ordinary citizens and distorts economic activity.
Speaking on Joy News’ PM Express on Tuesday, March 11, after presenting the 2025 Budget Statement to Parliament, Dr. Forson said the government is committed to overhauling the VAT regime to make it fairer and more efficient.
“We need to reform VAT and reform it in such a way that it provides relief to the ordinary Ghanaian household,” he emphasised.
“If you look at Africa today, Ghana is the only country with an effective VAT rate of about 21.9%. Most countries have an effective rate of around 22%, but the second highest after Ghana is Morocco, with about 20%. Clearly, there is a problem.”
As the government begins its engagement process, many expect the outcome of these reforms to determine the affordability of goods and services in the coming years and shape Ghana’s economic recovery efforts.
Whether the reforms will lead to lower VAT rates or a restructuring of exemptions and compliance measures remains to be seen, but one thing is clear—the Finance Minister says he is making VAT reform a top priority for the Mahama administration.
[embedded content]Dr. Forson pointed out that Ghana’s VAT system has become highly distorted due to the combination of different tax structures that have created inefficiencies.
“There is a cascading effect. We have a mix of sales tax and value-added tax. We have a flat rate, a standard rate, and multiple distortions. This makes the system unnecessarily complicated and creates inefficiencies in the economy.”
The Finance Minister noted that these distortions are not only making it harder for businesses to comply but also increasing the cost of living for ordinary Ghanaians.
“The system as it stands today makes everything expensive. The cascading nature means that taxes pile on taxes before they get to the final consumer,” he explained.
Dr. Forson assured Ghanaians that the government will take time this year to properly engage stakeholders and review the VAT system to create a more balanced structure.
“We think this year, we need to spend some good time engaging properly and reviewing the Value Added Tax. This is not something we will rush, but something we will get right.”
His comments come at a time when businesses and consumers alike have been complaining about the rising cost of goods and services, largely attributed to high taxation and inflationary pressures.
The government’s decision to review and possibly restructure VAT could signal a major shift in its approach to revenue generation and economic policy.
While Dr. Forson did not outline specific measures the government intends to implement, he reiterated that the primary goal is to ease the tax burden on households while ensuring a more transparent and fair taxation system.
“We are committed to fixing this,” he assured. “The VAT system must work for the people, not against them.”
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