Businesses call on government to broaden tax base and reduce utility expenses in pre-budget push

Ghana's private sector is mounting pressure on government to expand the tax net and tackle soaring utility costs before the mid-year budget presentation, arguing that formalised businesses are bearing an unfair share of the nation's tax burden.

The Association of Ghana Industries (AGI), a leading private sector body, has made a strong case for structural tax reform, highlighting that formally registered enterprises continue to shoulder a disproportionate tax load because they are more easily tracked by tax authorities. This imbalance, industry leaders warn, disadvantages compliant businesses and distorts fair competition across the economy.

The tax burden challenge

Formally registered businesses—those operating with proper licensing, accounting systems, and transparent records—bear a heavier effective tax rate than the informal economy, which remains largely outside the tax net. The AGI's position reflects long-standing frustration in Ghana's business community that tax compliance is not evenly enforced. Smaller formal enterprises particularly struggle with the combination of income tax, value added tax (VAT), corporate levies, and various statutory contributions, whilst unregistered traders and informal sector operators escape systematic taxation.

This structural problem has worsened as government has sought to raise domestic revenue in recent years. With a large informal economy—estimated to represent over 80 per cent of Ghana's total economic activity—the treasury has limited capacity to collect taxes from this segment, forcing greater reliance on registered firms.

Utility costs eating into competitiveness

Beyond taxation, the AGI has also spotlighted the escalating cost of electricity and water as a critical drag on business profitability and industrial competitiveness. Manufacturing firms, agribusinesses, and service providers all depend heavily on reliable, affordable utilities. Rising energy tariffs—driven by currency depreciation, fuel costs, and distribution inefficiencies—squeeze profit margins and increase production costs, making Ghanaian goods less competitive both domestically and in regional markets.

What this means for Ghana's economy and budget strategy

The AGI's dual advocacy comes at a crucial moment. Ghana faces persistent fiscal challenges, with revenue collection falling short of budget targets and debt servicing consuming a growing share of government spending. Policymakers must balance two competing pressures: broadening the tax base to increase revenue without crushing formalised businesses, and addressing utility costs that undermine industrial productivity.

If government widens tax collection to include more informal sector participants, it could reduce the burden on compliant formal enterprises and boost overall revenue—a win-win for business and public finances. However, this requires investment in tax administration, digital payment systems, and enforcement capacity.

Lower utility costs would improve business margins, encourage investment, and potentially create jobs. Yet utilities require substantial capital investment and operational efficiency to deliver affordable tariffs sustainably.

The mid-year budget review offers a platform for government to signal commitment to these reforms. Ghanaian businesses will be watching closely to see whether these concerns are meaningfully addressed or remain unfulfilled requests from the private sector.