Burden of taxation should be minimized on low-income earners – Prof Abena Oduro advises govt

Associate Professor in the Department of Economics at the University of Ghana Legon, Prof. Abena Oduro has advised government to minimize the burden of taxation on low-income earners.

According to her, persons at the lower end of the income distribution should have a lower share of their income going into tax payment than the share paid by higher-income earners.

“The burden of taxation should be minimized for people at the lower end of the income distribution. This does not mean that they do not pay taxes, but that the share of their income that is paid as taxes should be lower than the share paid by higher income groups.”

She made this statement at the 4th Kwadwo Baah Wiredu Memorial Lecture held on Thursday, October 31, on the theme: From Macro to Micro; Translating Good Economic Indicators into Improvements in the Peoples Well-Being.

The Director of the Meridian Institute for Advanced Studies in Africa at the University of Ghana, indicated that, with government’s budget skewed towards consumption expenditure, it has the difficulty in achieving its target for development expenditure.

However, she urged government to reassess its spending expenditure and consider improving its tax effort.

“There is the need to improve the fiscal condition of the economy with the need to look beyond the size of fiscal deficit and interrogate the size of government spending and revenues, as well as the composition of governments spending and the groups who bear the burden of taxation.”

Prof. Oduro whiles delivering her lecture, noted that as the recent rebasing of the gross domestic product revealed the Ghanaian economy to be much larger than originally perceived, it also revealed that the tax and spending ratio are much lower than we thought them to be.

She explained that, “government must ramp up its collection efforts and by so doing this will provide the fiscal space to increase spending in ways that will contribute to the well-being of its citizens.”