Beyond Taxes: Five Surprising Ways Ghana’s Public Sector Raises and Records Revenue
From taxable gifts and in-kind grants to debt relief and internally generated funds, public revenue is more varied than it first appears.
When people think about how governments finance public services, taxes usually come to mind first: income tax, value-added tax, property rates and customs duties. That connection is valid, but it tells only part of the story.
Public-sector finance also captures resources that never arrive as ordinary cash receipts. Governments and public institutions may receive donated assets, technical services, debt relief and revenue generated directly from their operations. Recognising these flows properly is essential to showing the true scale of the resources available for public service delivery.
Here are five revealing examples from Ghana’s tax and public financial management landscape.
1. Some Gifts Can Be Taxable
A birthday present is not automatically taxable simply because it is a gift. Under Ghana’s income-tax framework, the treatment depends on the nature of the gift, the recipient’s circumstances and the relationship between the donor and recipient.
Gifts connected with employment or business generally form part of the recipient’s income and are taxed under the applicable graduated rates. Gifts received as investment income may be subject to a flat rate, while exemptions can apply to transfers under a will or intestacy and to gifts from specified relatives, including a spouse, child, parent, sibling, aunt, uncle, nephew or niece.
The broader lesson is that tax law looks beyond labels. A transfer described casually as a “gift” may still be taxable if it represents employment, business or investment income. Anyone receiving a substantial gift should therefore consider its source and seek current guidance before assuming that no tax is due.
2. Grants Do Not Always Arrive as Cash
A government grant may be a bank transfer, but it can also take the form of goods, equipment or specialised support. Public institutions regularly receive resources in kind from development partners, other governments and charitable organisations.
Examples may include:
- Health and social-protection supplies donated to support a public programme.
- Vehicles, machinery or security equipment transferred to a public institution.
- Technical services provided by specialists to support an investigation, reform or emergency response.
Where the applicable accounting criteria are met, the receiving entity recognises the resource and related revenue using the measurement basis required by public-sector accounting standards. This prevents valuable non-cash support from disappearing from the financial record. From 1 January 2026, IPSAS 47 provides the principal international guidance for public-sector revenue transactions, replacing the earlier revenue standards, including IPSAS 23.
3. Debt Forgiveness Can Create Revenue
When a creditor formally forgives a government liability, the economic benefit is real even though no cash enters the treasury. The government’s obligations fall without a matching outflow of resources.
Subject to the applicable accounting requirements, the reduction in the liability may be recognised as revenue. This treatment reframes debt relief: it is not merely the disappearance of an amount owed, but a measurable improvement in the public entity’s financial position. The substance and terms of the arrangement, however, must be assessed carefully before recognition.
4. Public Institutions Generate Their Own Revenue
Public hospitals, schools, transport operators and local authorities do not rely solely on central-government allocations. Their funding may include decentralised transfers, grants and donations, and internally generated funds, commonly known as IGF.
IGF is revenue that a public entity is legally authorised to collect from its own activities. The source reflects the institution’s mandate:
- A public hospital may collect admission fees, laboratory charges and medicine-sale proceeds.
- A public transport operator may earn fares, luggage fees and parcel-delivery charges.
- A local authority may collect approved rates, licences, permits and service fees.
This distinction is more than an accounting technicality. Transfers represent funding from the centre, while IGF reflects an institution’s own service activity and local revenue base. Ghana’s public financial management framework requires tax and non-tax revenue, including IGF, to be collected, recorded, reported and lodged in accordance with the law.
5. Not Every Public-Sector Allowance Is an Employee Salary
Public-sector classification follows the substance of a payment, not simply its everyday description. An allowance paid to a public office-holder is not automatically classified as compensation of employees.
The correct treatment depends on the person’s legal relationship with the entity and the purpose of the payment. Where a recipient is not an employee and an allowance is intended to facilitate official duties, the payment may be recorded under goods and services rather than employee compensation. The applicable chart of accounts, budget instructions and authorising rules should be checked before making that classification.
Why These Distinctions Matter
Public revenue is far more diverse than the taxes shown on a payslip or receipt. It can include non-cash transfers, debt relief and income generated by public institutions themselves. Accurate classification makes these resources visible, strengthens accountability and gives decision-makers a clearer picture of what is available to finance public services. The next time a government reports its revenue, it is worth asking not only how much was collected, but also what form the economic benefit took and how it was recognised.
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