Finance Minister Urges African Governments to Reform Tax Systems for Simplicity and Business Friendliness

Dr. Mohammed Amin Adam, Finance Minister, has called on African governments to reform tax systems to make payment simple, fast, and friendlier to businesses and individuals. This, the Minister stated, would encourage compliance, increase domestic revenue, and reduce the continent’s heavy reliance on expensive international loans for development.

According to the World Bank, low-income countries, including those in Africa, face an estimated annual financing gap of half a trillion dollars to achieve the Sustainable Development Goals (SDGs) by 2030. However, in most Sub-Saharan Africa economies, taxes collected amount to less than 15 percent tax-to-Gross Domestic Product (GDP), which the World Bank says is barely enough to carry out basic state functions.

During an interview on the margins of the just-ended 2024 African Development Bank (AfDB) Annual Meetings in Nairobi, Kenya, Dr. Amin Adam emphasized the need for fairer tax systems that treat taxpayers well. "We must reform our tax system to become fairer, and treat the taxpayer well," he stated.

"I’m not saying we should overtax our people, but ensure that we bring efficiency to bear on our revenue collection and tax system... and have a system that is friendly to taxpayers and simple," he added.

Dr. Amin Adam also advocated for incentives to encourage tax payments and urged taxpayers to be honest, noting that frequent audits and harassment often result from tax avoidance and income non-disclosure. "We must make sure that we bring in the informal sector because a few people are paying the taxes, therefore, we must expand the tax net and bring in more people," the Minister said.

He explained that expanding the tax base would not only reduce the burden on the few who paid taxes but also generate more revenue to support Africa's development. Continuous education and sensitization on the need to pay taxes, as well as leveraging Artificial Intelligence (AI) and digital solutions, were highlighted as measures to improve tax efficiency and reduce the time spent on tax collection and payment.

"More importantly, we must spend the tax money prudently in areas that can generate more money so that we have value for money," Dr. Amin Adam said.

In a related development, Ghana recently launched a monthly stakeholder engagement initiative with the Diplomatic Corps and the business community to discuss and implement solutions to make taxes friendlier, improve the business climate, and track progress in domestic revenue mobilization.

The government reiterated its commitment to not overburden taxpayers but to use effective means to collect revenue from tax evaders while ensuring that tax payment is easy and fast.

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