The main objective of the study is to estimate and analyze Ghana’s tax potential and effort and to determine how much more tax the country could generate based on its desired expenditure needs. To achieve this objective, a stochastic tax frontier model has been analyzed using annual secondary data, covering the period 1985 to 2014. The analyses indicate that an increase in the taxable base and institutional improvements help to increase Ghana’s optimum tax potential. The study also reveals that political institutional improvement reduces inefficiency in Ghana’s tax system. In addition, the study finds that Ghana has enough of a tax gap to be exploited to meet its rising expenditure needs.