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Income inequality widens as poor bear tax burden more than rich: expert

Economist, Professor Godfred Bokpin Economist, Professor Godfred Bokpin

Professor Godfred Bokpin, an economist and finance expert, says low- and middle-income workers in Ghana pay more taxes than the rich.

He said these tax measures have worsened the country’s inherent inequality by making the poor poorer and the rich richer.

In an interview with the Ghana News Agency, Professor Bokpin stated that the government’s prioritization and concentration on consumption-based taxes, which disproportionately tax low-income people, have fueled inequality in the country.

“The way the government taxes citizens is very important in reducing inequality. Unfortunately, Ghana has chosen a path that worsens inequality due to the consumption-based taxes we are focusing on. Such taxes affect to the poor and marginalized more than to the rich,” he stated.

He noted that consumption-based taxes, particularly those on petroleum products, electronic tax (E-levy) and VAT increases, negatively impact the poor.

According to Oxfam International, the richest ten percent of Ghanaians now consume 32 percent of the country’s total production.

He also stated that the poorest ten percent of the country consumes only two percent of its total production.

Professor Bokpin proposed that the government move from consumption-based taxes to income taxes, focusing on the country’s ultra-wealthy and high-income people.

He suggested that this measure has the potential to generate $500 million in tax revenue for the government.

“If we can look at our tax regime and make sure that those who have extra income can contribute more, that can help us generate more income for the country. If we had made some progress in taxing high net worth people, we could raise half a billion of dollars from the super rich. This country has many super rich people. We might assume that times are difficult, but everything is very good with the super rich in the country,” he said.

The economist encouraged the government to seek policies that encourage high-income people to pay more taxes.”

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