According to a recent report by BudgIT Ghana, in partnership with the Society for Women in Taxation Ghana and the International Budget Partnership (IBP), titled “Ghana’s Untapped Economy: Analysis of Tax Compliance Behaviour of Informal Sector Workers in the Greater Accra Region,” efforts to expand Ghana’s tax base are being hampered by persistent issues within the informal sector.
The study finds that although a large number of workers in the unorganized sector are prepared to pay taxes, structural barriers still prevent voluntary compliance and restrict the amount of money that can be raised.
A significant fundamental problem is the pervasive mistrust of government agencies. Many unorganized workers think that corruption or poor management are to blame for the loss of tax income. This view has reduced the incentive to pay taxes and damaged trust in the tax system. The absence of obvious advantages, such better infrastructure or necessary services, only serves to increase public skepticism.
In addition to governance concerns, the paper outlines economic and structural barriers to compliance. Many people in the sector find it challenging to make regular tax payments due to income unpredictability. Many people view the tax system as being complicated and opaque, with difficult-to-navigate bureaucratic registration procedures, especially for individuals with little formal education.
There are extra obstacles for women working in the unorganized economy. According to the report, indirect taxes and more frequent enforcement disproportionately affect female businesses, who comprise a sizable share of the workforce. Numerous people report encounters with harassment, a lack of financial flexibility, and the strain of balancing caring responsibilities with business operations.
Despite these obstacles, the study finds that informal workers are quite eager to pay taxes provided the system is made more egalitarian, transparent, and sensitive to their daily lives.
BudgIT Ghana and its partners suggest specific improvements to address these problems, such as streamlined tax registration and payment procedures using mobile and decentralized platforms. In order to facilitate tax compliance, the paper also urges the growth of mobile money and USSD-based payment methods. It also promotes gender-sensitive tax laws, like flexible payment plans and procedures for enforcing anti-harassment laws.