Taxation, by its very nature, operates on an unwritten social contract of reciprocity.
Citizens surrender a fraction of their wealth and in return, the state guarantees basic services, infrastructure, security and a conducive environment to thrive. When this contract is breached, voluntary compliance collapses.
Data from Afrobarometer reveals a stark dichotomy in Ghanaian civic behaviour: while 79 per cent of citizens acknowledge that the government has the right to collect taxes, an overwhelming majority state that it is difficult to see how those revenues are utilised.
Furthermore, empirical studies on domestic micro-SMEs show that perceived corruption and poor government performance directly erode public trust and tax morale.
The average taxpayer looks around and sees a stark disconnect:
• Citizens pay heavy direct and indirect taxes, yet they navigate death traps disguised as roads every day, resulting in exorbitant vehicle maintenance costs and tragic accidents.
• Qualified, trained nurses sit at home unemployed due to clearance delays, while multi-billion cedi hospital projects sit abandoned in bushes.
• Main thoroughfares are plunged into pitch darkness at night because streetlights are left non-functional, leaving motorists and pedestrians vulnerable to crime.
When citizens experience the pain of heavy taxation far more acutely than its benefits, tax avoidance ceases to be viewed as a crime by the public and begins to be rationalised as a survival mechanism.
System
To understand why our system feels so punitive rather than supportive, one only needs to look at the philosophical foundations of our tax authority compared to those of developed nations.
The mission statements of these institutions reveal everything about who they truly serve.
The Ghana Revenue Authority captures its purpose as follows: “To mobilise revenue for national development in a transparent, fair, effective and efficient manner.”
On paper, it sounds standard. However, the operational focus is entirely centred on the act of collection and extraction.
In sharp contrast, look at the mission statement of the United States Internal Revenue Service (IRS): “Provide America’s taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.”
Notice the immediate prioritisation of "top-quality service" and "helping" the taxpayer.
The emphasis is placed on service delivery and facilitation before enforcement.
Similarly, the United Kingdom’s HM Revenue and Customs (HMRC) states its core purpose clearly: “We collect the money that pays for the UK’s public services and give financial support to people.”
The contrast is glaring. The IRS and HMRC view the citizen as a client or a partner in nation-building, acknowledging that service and support are prerequisites to collection.
The GRA, conversely, has historically functioned with an extraction-first mentality.
Our authority focuses heavily on the macro-objective of filling state coffers, often forgetting the micro-reality of the micro-SMEs and individuals who bear the brunt of aggressive tax audits and unyielding enforcement campaigns.
Metrics
The fiscal metrics tell a telling story.
While the government celebrates an improved tax-to-GDP ratio reaching roughly 14 per cent to 17 per cent due to aggressive reforms, tax fairness perceptions hover critically low around 51 per cent.
When citizens do not trust the state to manage their funds, forcing higher tax burdens simply drives the economy further into the informal safety net.
It is time things changed. The GRA must transition from being a revenue hunter to a service provider.
More importantly, the broader government must realise that revenue mobilisation is a two-way street. If the state expects local companies and individuals to step out of the shadows, it must make the benefits of compliance visible.
We must see our taxes at work not just in budgetary speeches, but in smooth asphalt roads, functional streetlights, well-equipped hospitals and an accountable public service sector.
Until the average Ghanaian can look at a public amenity and confidently say, "My tax built this," the shadow economy will continue to grow and tax avoidance will remain an undefeated opponent.
The writer is an Internal Audit Manager,
Ubuntu Capital Microfinance.
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