McKinsey to help Ghana Revenue Authority improve tax collection process

The Ghanaian tax authority has hired global management consultancy McKinsey & Company to assist with improvements in the collection process. The move comes after the authority found a gap of nearly $370 million between its expected revenue collection for this year and the real funds accumulated.

Ghana’s revenue system is currently navigating a tough period. A low run of collections has led to a situation where the international Monetary Fund (IMF) has had to step in and recommend an increase in taxes, given the fact that the country’s fixed investment levels are already comparatively low.

The government responded with strict measures in July, when the President Nana Akufo-Addo declared a proportional taxation system of sorts where those of higher income levels would pay higher tax. The drive was introduced with the specific objective of raising approximately $260 million by the end of the year.

However, the measures appeared to have missed their mark considerably, given that the revenue collected up until August this year have fallen short by nearly $370 billion of the target for the same period. If the trend continues, this will be the latest in a number of consecutive years when the country’s revenue levels will fall substantially short of the target.

The country is currently engaged in an IMF bailout programme worth a staggering $1 billion. The programme is due to expire next year, and there have been few promising indicators that the revenue collection systems are improving. Last year, the country missed its revenue collection target for the whole year by $450 million, which represents over 6% of the total expectation for the period.

According to the commissioner General of the GRA Emmanuel Kofi Nti, the shortfalls are a result of failures in the customs collection department of the country. In order to help rectify the situation, the GRA has now called upon the services of McKinsey & Company.

Nti explained that McKinsey will “change GRA’s systems to be comparable to the best in revenue administration in the world through simplifying our processes and introducing innovation.” Ghana is among the most politically stable countries across Africa, but its high public debt levels might prove a major source of instability if the situation is not improved upon.