Income inequality widens as poor shoulder burden on taxes than rich- Expert

Professor Alafur Bokpin, an economist and finance expert, says Ghana’s low and middle-income workers pay more in taxes than the affluent.

He said that those tax measures worsened the country’s inherent inequality by making the poor poorer and the rich richer.

In an interview, Prof. Bokpin stated that the government’s prioritization and concentration on consumption-based taxes, which disproportionately burden low-income earners, fueled inequality in the country.

“The way the government taxes the citizens is very important for narrowing inequality. Unfortunately, Ghana has chosen a path that worsens inequality because of the consumption-based taxes that we are focusing on. Such taxes affect the poor and marginalised more than the rich, “he said.

He said that consumption-based taxes, particularly those levied on petroleum products, the electronic levy (E-levy), and VAT increases, adversely impacted the poor.

According to Oxfam International, the wealthiest ten per cent of Ghanaians now consume 32 per cent of the country’s total output.

It said the country’s poorest ten percent consumed just two per cent of its overall output.

Prof. Bokpin proposed that the government shift from consumption-based taxes to income taxes, with a focus on the country’s ultra-rich and high-income individuals.

He said the measure had the potential to generate $500 million in tax revenue for the government.

“If we can look at our tax regime and ensure that those who have extra income are able to put a lot on the table, it can help us generate more income for the country.

“If we had made some progress in taxing high-net-worth individuals, we would be able to raise $500 million from the super-rich.

“This country has many super-rich people. We might assume that times are hard, but all is well with the super-rich in the country.

Focusing on taxing them can do a lot for us as a country,” he said.

The economist encouraged the government to seek policies that encourage high-income persons to pay taxes.