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A new research has revealed the increasing economic inequality in the country and the need to fight to reduce extreme poverty in Ghana.
The research conducted by Oxfam, an international research organization and presented by CUT Accra exposes the inequalities in the system, revealing that a large part of the population remains locked out of gains from growth
The research indicates further that Ghanaians who wallow in poverty are rather overly exposed to indirect taxes compared to the rich.
“This overexposure worsens the inequalities in the country” the research states.
According to the result, the nation collects approximately 55 per cent of taxes from indirect taxes and this was found to be globally regressive.
Ghana, is also not performing well in tax collection with a low GDP ratio of about 16 per cent compared to 19.1 per cent in Africa.
The research further reveals that tax exemptions and deductions to multinational firm’s amount to an average of US$ 1.3 billion a year representing two-thirds of the education budget and 80 per cent for health.
Furthermore, the research shows how the irregular flow of the District Assembly Common Fund (DACF) has negatively impacted the Assemblies, for which they are unable to raise enough funds through the property tax.
It also revealed that, the nation is losing about US$ 401 million annually which is under 2 per cent of GDP.
“This happens due to illicit flows through trade in mispricing alone.”
It also showed that, the education sector budget increased by 11 per cent from a total cost of GHc 8.33 billion in 2017 to a total of GHc 9.26 billion in 2018.
However, much of the increment was directed to the payment of compensation as compared to goods and services including capital expenditure.
“The share of allocation to compensation increased significantly from 91.4 per cent to 98.5 per cent in 2017 and 2018 respectively.” The research indicated.
It said, even though health and education account for two-thirds of reduction in inequalities on social expenditure, it is vital that any spending on health must be reversed.
“This would help allocate greater portion of resources to the poor and ultimately move towards universal health care.
“Moreover, the existing health budget needs to work better addressing inequalities and to increase efficiencies in the system,” the report stated.
The social protection scheme, on the other hand, could be made to enforce efficiency in order to combat inequalities, whereas, the LEAP can also help in tackling the inequalities in the country.
“Addressing geographical inequality must be improved through better analysis of the budget and the use of equality spending formula.”
The research recommended government to enhance tax benefits, make design for tax system more progressive, get a progressive tax collection system and urged MMDAs to enhance revenue collection system to maximize revenue.
Source: Nii Aflah Sackey