Accra: For any nation to deliver on its promise to citizens, it must mobilise the resources to fund essential services. In Ghana, taxes account for over 60% of total government revenue. They build hospitals, stock classrooms, construct and pave roads, and secure communities through the provision of amenities and social facilities. Yet for too long, our tax system has left a large segment of Ghanaians outside the conversation. That is why the Modified Taxation System (MTS) represents Ghana's surest way to inclusion in tax administration.
According to Ghana Web, a significant portion of the country's economy operates in the informal sector - market traders, artisans, small retailers, and service providers. Many of them want to contribute to national development but face barriers: complex filing processes, limited access to tax offices, and a perception that the system is not designed for them. When these businesses remain outside the tax net, the burden falls disproportionately on compliant taxpayers. It also denies government the full revenue needed to deliver on infrastructure, healthcare, education, and security. Inclusion is not just fair - it is necessary for growth.
The MTS is a simplified tax regime introduced by the Ghana Revenue Authority to bring MSMEs and informal sector operators into the formal tax system. Under the leadership of Anthony Sarpong, Commissioner-General of the GRA, the MTS Implementation Committee has been working with a dynamic team at the GRA to implement strategies that remove complexity in the tax administration system for the informal sector. Under the MTS, eligible taxpayers do not wrestle with detailed accounting or annual returns they are not equipped to prepare. Instead, they pay a presumptive, simplified tax based on factors like business type, location, and turnover. Registration, filing, and payment are streamlined. Compliance becomes predictable and affordable.
Inclusion through the MTS is about three things: Fairness, opportunity, and accountability. Everyone who benefits from public services should contribute their fair share. MTS expands the tax base so the burden is shared more equitably. When a business enters the formal tax system, it gains access to credit, business support services, and government procurement. Tax compliance becomes a gateway, not a barrier. A compliant taxpayer has the moral authority to demand accountability from the government. When more Ghanaians pay tax, more Ghanaians can rightfully ask, 'What are we getting for it?' That is the social contract that drives development.
The success of the MTS depends on trust. That is why the GRA's Sustained Tax Education Programme is investing in awareness creation. Ghanaians must know their obligations and the benefits of compliance. The GRA is also leveraging technology - the Integrated Tax Administration System and digital payment platforms - to make tax services accessible where people live and work. Inclusion means meeting taxpayers where they are.
Ghana's development cannot be financed by a narrow base. The Modified Taxation System offers a practical, dignified way to bring more Ghanaians into the tax system without overwhelming them. It recognises the realities of small business and rewards the decision to formalise. Inclusion is not about adding names to a register. It is about making every Ghanaian see themselves as a stakeholder in our nation's future. The Modified Taxation System is how we get there. It is Ghana's surest way to build a tax culture rooted in fairness, participation, and shared prosperity.
Policy reforms have been proposed to ease the implementation of Ghana's MTS and align it with global best practices. Simplifying tax design and administration, strengthening taxpayer education, leveraging technology, and creating positive incentives for formalization are among the key recommendations. These reforms aim to ensure fairness and effective coordination across institutions.
The Modified Taxation Scheme can succeed if it is simple, beneficial, and visible. Global experience shows that informal sector taxation works best when governments reduce complexity, offer clear benefits, and treat micro taxpayers as partners in development, not targets of enforcement. With these reforms under the RESET agenda, Ghana can move closer to a tax system where inclusion is real, compliance is voluntary, and revenue growth supports sustainable development.
Ghana has a great opportunity now as the Income Tax Act 2015 and the Local Governance Act 2016 (Act 936) are being reviewed. Schedule 2 of the Income Tax Act 2015 and Schedule 12 of the Local Governance Act can be reviewed together and aligned to ensure harmony with the collection and administration of taxes at the local government level, focusing on the informal sector. Let us embrace it. Know your taxes, pay your taxes, and let us build Ghana together.