Report on Aligning Ghana’s Fiscal Policy with Sustainable Development Goals

Ghana has demonstrated significant economic progress, with an average growth rate of 7% since 2000, contributing to advancements toward SDG 8 (Decent Work and Economic Growth). However, rising inequality has meant that the benefits of this growth have not been equitably distributed, posing a challenge to achieving SDG 10 (Reduced Inequalities) and SDG 1 (No Poverty). Fiscal policy, encompassing both taxation and public expenditure, serves as a critical instrument for fostering inclusive growth and advancing SDG 5 (Gender Equality). This report analyzes Ghana’s revenue mobilization efforts and proposes a holistic fiscal framework to ensure that tax and spending policies are mutually reinforcing and effectively targeted to achieve the Sustainable Development Goals.

Analysis of Ghana’s Fiscal Framework and its Impact on SDG Progress

Revenue Structure and Domestic Resource Mobilization (SDG 17)

Effective domestic resource mobilization is fundamental to financing the SDGs, as outlined in SDG 17 (Partnerships for the Goals). In Ghana, taxation is the primary source of government revenue, averaging 78% of total revenue between 2013 and 2024. The national tax-to-GDP ratio, a key indicator for SDG 17.1, has shown improvement, rising to a projected 18% in 2025 under the Medium-Term Revenue Strategy (2024–2027). The revenue composition is as follows:

• Direct Taxes: Constituting approximately 47% of tax revenue, these include progressive personal income taxes and a corporate income tax (CIT) structure with varied rates (8% to 35%) that offers some progressivity, supporting SDG 10.
• Indirect Taxes: Accounting for 41% of tax revenue, with Value Added Tax (VAT) being the largest component. While VAT has some progressive features, its application can be regressive at the consumer level.
• International Trade Taxes: These have become a less significant part of the revenue mix, representing about 13% of total revenue.

Macroeconomic Challenges and Fiscal Constraints

Ghana’s macroeconomic stability faced significant challenges in 2022, leading to a situation of debt unsustainability. Rising interest payments have crowded out essential public investment, with interest costs more than doubling capital spending between 2020 and 2021. This fiscal constraint directly impedes progress on multiple SDGs by limiting the government’s capacity to invest in critical areas such as:

• SDG 3 (Good Health and Well-being)
• SDG 4 (Quality Education)
• SDG 6 (Clean Water and Sanitation)
• SDG 9 (Industry, Innovation, and Infrastructure)

Recommendations for an SDG-Aligned Taxation System

Expanding the Tax Base for Equity and Inclusivity (SDG 10 & SDG 5)

Past tax reform initiatives in Ghana offer critical lessons for designing policies that advance equity and inclusion.

1. Taxation of Financial Assets: A 2016 proposal to tax interest from financial assets was aimed at improving the tax system’s progressivity (SDG 10), as such assets are predominantly held by higher-income individuals. Reintroducing such a measure could also advance gender equality (SDG 5), given the gender gap in financial asset ownership. Success would depend on careful timing and stakeholder engagement to build a credible fiscal contract.
2. Electronic Transfer Levy (e-levy): An attempt to broaden the tax base by targeting the informal sector, the e-levy was ultimately repealed in 2025. The policy’s design proved regressive, disproportionately affecting low-income individuals and women-owned micro-enterprises, thereby undermining progress on SDG 1, SDG 5, and SDG 10. The failure highlights the need for tax policies to account for the heterogeneity of the informal sector and avoid placing undue administrative burdens on small operators.

Strengthening Tax Administration for Effective Institutions (SDG 16)

Building effective, accountable, and transparent institutions, a core target of SDG 16, is essential for improving revenue collection. Administrative weaknesses currently limit revenue from sources like rental income and property taxes. The recent implementation of a unified common property rate platform, a collaboration between central and local governments, has increased the number of billable properties from 1.3 million to over 10 million. This initiative strengthens institutions (SDG 16) and enhances the potential for local governments to fund services that support SDG 11 (Sustainable Cities and Communities). To ensure these reforms advance gender equality, it is crucial to collect sex-disaggregated data on property ownership.

Enhancing Tax Compliance and the Fiscal Contract

Low tax compliance remains a significant challenge. Improving compliance requires a multi-faceted approach that aligns with SDG principles:

• Reducing Compliance Costs: The costs associated with tax compliance must be minimized, particularly for micro and small firms, which are predominantly owned by women (SDG 5).
• Strengthening the Fiscal Contract: Tax education must extend beyond compliance procedures to include transparent reporting on how revenues are collected and utilized. Building public trust that tax revenues translate into tangible improvements in public services is critical for voluntary compliance and supports the institutional integrity envisioned in SDG 16.

Integrating Expenditure Policy to Accelerate SDG Achievement

The Role of Public Spending in Reducing Poverty and Inequality (SDG 1 & SDG 10)

Fiscal incidence analyses demonstrate that public spending can effectively counteract the regressive impacts of certain taxes and directly advance the SDGs. In Ghana, government expenditure on education (SDG 4), health (SDG 3), and social protection programs like the Livelihood Empowerment Against Poverty (LEAP) has been pivotal in reducing poverty. The LEAP program, by targeting the elderly and households with pregnant women and young children, has increasingly benefited women, contributing to both SDG 1 and SDG 5.

Prioritizing Investment in Gender-Responsive and Climate-Resilient Infrastructure

Despite overall growth in public spending, investment in capital infrastructure remains low. This deficit particularly affects women, who bear a disproportionate burden of unpaid care work. Strategic investments are needed in:

• Water and Sanitation (SDG 6): Less than one-third of households have access to pipe-borne water on their premises.
• Clean Energy (SDG 7): Only 29% of households use clean cooking fuels.
• Transport and Roads (SDG 9): Improved infrastructure is essential for economic access.

Investing in such infrastructure not only reduces unpaid work, a key target of SDG 5, but must also be climate-resilient to address the challenges of SDG 13 (Climate Action).

A Holistic Fiscal Framework for Sustainable Development

To achieve the SDGs, Ghana requires a holistic fiscal policy approach that integrates revenue and expenditure with clear developmental objectives. The essential elements of this framework include:

• Adopt a medium-term framework with explicit distributional goals: Ensure that fiscal policies are designed to proactively reduce poverty and inequality (SDG 1, SDG 10).
• Strengthen inter-governmental cooperation: Foster collaboration between central and local governments to enhance service delivery and revenue mobilization, supporting SDG 11 and SDG 16.
• Invest in capacity and data: Build analytical skills and collect sex-disaggregated data to enable the design and implementation of gender-equitable policies (SDG 5, SDG 17).
• Ensure broad citizen support for fiscal policy measures: Establish a credible fiscal contract by linking tax reforms to tangible improvements in public services, thereby building trust in institutions and ensuring the long-term sustainability of development financing (SDG 16).

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 1: No Poverty – The article discusses how fiscal policy, through taxation and spending on social programs like the Livelihood Empowerment Against Poverty (LEAP), can impact poverty levels in Ghana.
• SDG 5: Gender Equality – A central theme is the role of fiscal policy in promoting gender equality. The article analyzes the differential impacts of taxes on women, the gender gap in asset ownership, and the burden of unpaid work on women, which can be alleviated by public spending on infrastructure.
• SDG 8: Decent Work and Economic Growth – The article begins by noting Ghana’s high economic growth rates and emphasizes the need for this growth to be inclusive, connecting fiscal policy to the quality and equity of economic development.
• SDG 9: Industry, Innovation and Infrastructure – The text highlights the need for public investment in critical infrastructure such as water, sanitation, electricity, and roads to support social goals, particularly reducing women’s unpaid work.
• SDG 10: Reduced Inequalities – The article directly addresses rising inequality despite economic growth and declining poverty. It examines how progressive taxation and targeted public spending can be used as tools to create a more equitable distribution of wealth.
• SDG 16: Peace, Justice and Strong Institutions – The discussion focuses on strengthening public institutions by improving tax administration, enhancing compliance, increasing accountability, and establishing a “credible fiscal contract” between the government and citizens.
• SDG 17: Partnerships for the Goals – The core subject of the article is strengthening domestic resource mobilization through more efficient and equitable tax collection, which is a key aspect of this goal.

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 1: No Poverty

  • Target 1.3: Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable. This is directly addressed through the discussion of Ghana’s cash transfer program (LEAP) and free school meals, which are noted for counteracting the poverty-increasing effects of indirect taxes and increasingly benefiting the poor.

• SDG 5: Gender Equality

  • Target 5.4: Recognize and value unpaid care and domestic work through the provision of public services, infrastructure and social protection policies. The article explicitly states that “Women in Ghana need infrastructure to reduce the burden of unpaid work (e.g., water, sanitation, electricity, transportation/roads).”
  • Target 5.a: Undertake reforms to give women equal rights to economic resources, as well as access to ownership and control over land and other forms of property, financial services, inheritance and natural resources. This is relevant to the discussion on the gender gap in financial asset and property ownership, and the suggestion to collect sex-disaggregated data on property owners to design “effective policies to bridge the gender asset/property gap.”
  • Target 5.c: Adopt and strengthen sound policies and enforceable legislation for the promotion of gender equality and the empowerment of all women and girls at all levels. The article’s overall recommendation for a holistic fiscal policy that considers gender inequality and designs gender-equitable tax policies aligns with this target.

• SDG 10: Reduced Inequalities

  • Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average. The article’s premise that “the gains from growth have not been equitably distributed despite declining poverty levels due to rising inequality” directly relates to this target, advocating for fiscal policies that ensure “inclusive growth.”
  • Target 10.4: Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality. This is the central theme of the article, which provides a detailed analysis of how fiscal policy (taxation and public spending) can be used to reduce poverty and inequality.

• SDG 16: Peace, Justice and Strong Institutions

  • Target 16.6: Develop effective, accountable and transparent institutions at all levels. The article calls for strengthening tax administration, improving accountability through measures like the unified common property rate platform, and building a “credible fiscal contract” where citizens trust that tax revenues will be used for their benefit.

• SDG 17: Partnerships for the Goals

  • Target 17.1: Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection. The entire article is an analysis of Ghana’s efforts and challenges in raising domestic revenue through taxation, discussing various measures to make revenue mobilization more efficient and equitable.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Tax revenue as a proportion of GDP (Tax-to-GDP ratio): The article explicitly uses this indicator to measure Ghana’s tax effort. It states that the ratio fluctuated “around 10-12% between 2013 and 2022” and was projected to rise to “18% in 2025.” This is a direct measure for SDG Target 17.1.
• Proportion of population covered by social protection systems: While not providing a specific percentage, the article implies this is a key metric by noting that the LEAP and free school meals programs “increased the coverage of the poor over time.” This relates to SDG Target 1.3.
• Proportion of households with access to basic services: The article provides specific statistics that serve as indicators for progress on infrastructure development (related to SDG Target 5.4). It mentions that “Less than a third of households have pipe-borne water on the premises,” “70.3% of rural households use electricity as the main lighting technology,” and “only 29% of households use clean fuels and technologies for cooking.”
• Sex-disaggregated data on asset ownership: The article suggests creating a database with “information on the sex of property owners” to help design policies to bridge the “gender asset/property gap.” This implies that the proportion of women who own property is a key indicator for measuring progress towards SDG Target 5.a.
• Tax compliance rate / Tax gap: The article implies this indicator by stating that tax compliance is low and citing an estimate that “only about 25% of potential revenue of the tax stamp… is paid.” This measures the effectiveness of institutions under SDG Target 16.6.

4. Table of SDGs, Targets, and Indicators

Source: brookings.edu