Inequality in Ghana: Assessing the Impact of Government Tax and Expenditure Policies Over a Century

Although rising inequality in sub-Saharan Africa has revived debates on the distributional effects of government tax and expenditure policies, there are relatively few long-term empirical studies on this issue. This chapter examines how government fiscal policies—both taxation and public spending—have evolved and shaped inequality trends in colonial and postcolonial Ghana. It finds that fiscal policy has generally had limited redistributive impact, due to the narrow tax base and a persistent bias in public spending toward the export sector. While calls for African governments to learn to tax more and spend better in order to reduce inequality are not misplaced, an understanding of the structural and political constraints that have historically limited the redistributive potential of fiscal policy is even more urgently needed.