EFFECTS OF TAX EVASION ON THE GHANAIAN ECONOMY

BOATENG, KOFI  ALFRED; PREMPEH KWASI A., EMMANUEL; MARFO, STEPHEN; OSEI ABIRI KOTOKO, NANA; OSEI, BANAHENE

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EFFECTS OF TAX EVASION ON THE GHANAIAN ECONOMY

BOATENG, KOFI ALFRED; PREMPEH KWASI A., EMMANUEL; MARFO, STEPHEN; OSEI ABIRI KOTOKO, NANA; OSEI, BANAHENE

URI: http://localhost:8080/xmlui/handle/123456789/3065

Date: 2012-11-22

Abstract:

The revenue from taxation is what literally sustains the existence of the state, providing the funding for everything from social programs to infrastructure investment. However, taxing certain kinds of activities, sectors, or individuals- the so – called informal sector” – is an additional challenge for tax administrations in both developing and developed countries, and the “fiscal gap” that arises from the failure to tax this sector can be quite large. The primary sources of data for this study were obtained from secondhand shoe dealers at Kejetia-Kumasi, by the using a set of questionnaires. Some of the major findings of the research proved that calculation of tax returns was complex and difficult for tax payers and tax agents who collect taxes on behalf of the GRA over-state tax rates and tax payers do not see the need to pay tax due to the fact that revenue accrued from taxes are not used meaningfully by the government.

Description:

Tax avoidance is the utilization of the legal of the tax regime to one’s own advantage, to reduce the amount of tax that is payable by means that are with the law. By contrast tax evasion is the general term for effort to not to pay tax by illegal means. According to the former British chancellor of the Exchequer Denies Healey, the difference between tax avoidance and tax evasion is the thickness of a prison wall. Tax evasion is a phenomenon that is present in all societies using Government expenditures. There is a huge body of literature on the estimate of its extent to give an impression of its magnitude: the Ghanaian tax agency GRA (Ghana Revenue Authority) estimates that Ghana tax gap amounts to 17% ($95.3bn) of taxes owed for 1992(GRA 1996). Tax evasion through avoidance of the inflation tax cause the growth rate to decrease the inflation rate rise, and to decrease a decreasing rate, Gillm and Kejak (2005 a, b). Evidence tends to support such a nonlinear profile, shoeing a more negative marginal growth effect the lower is the inflation rise. As the tax rate raises and the shadow price of consumption rises, the consumer becomes increasingly sensitive to money use, and so increasingly uses credit as a means of tax avoidance to substitute away from the taxed good. Set within endogenous growth, the tax avoidance via credit causes the negative growth effect of the tax to be less. Margaret Wilkinson (1992) defines tax as confined to compulsory unrequited payment to the Government. It has again been defined by Wernet Sichee (1974) as a system of payment that the individual and the firms are legally required to pay to the government.

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