CHALLENGES AND EFFECTS OF TAX STAMP ON SMALL SCALE BUSINESSES IN THE KUMASI METROPOLIS

Abstract

This study sought to examine the Challenges and Effect of Tax Stamp on Small Scale Businesses in Kumasi Metropolis. Ghana loses billions of tax revenue every year due to unreformed tax regimes and ineffectiveness. A wide range of reforms have been introduced by the Ghana Revenue Authority with the aim of capturing all if not majority of tax payers in the informal sector. The act of corruption, lack of patriotism and inadequate manpower to aid the collection of tax revenue are some of the challenges confronting the informal sector. A primary and secondary source of data collection were used for this research work, structured questionnaire were randomly administered to tax payers in the informal sector specifically operators/owners of Small Scale Businesses and some tax officials. Interviews were also conducted. A sample population size of 100 informal business operators was used, and the data collected were analyses my SPSS 16.0 VERSION. Analysis of data collected established that the factors that mostly contribute to the challenges and the effect of tax stamp on small scale businesses includes; corruption on the part of tax officials, there is lack of patriotism on the part of the tax payers, there is an inequitable tax laws in Ghana and these tax laws have limited application. The recommendation of the study included, capacity building, tax information and education, simplification of filing procedures, improving tax administration and preparing a data base of a list of business in the informal sector. There should also be judicious use of tax payers’ money in order to encourage compliance with payment of tax, effective tax legislation to improve the treatment of tax payers and tax officials in order to motivate them. It is the hope of the researchers that the findings would contribute to effective tax administration in the informal sector; political leaders should refrain from exhibiting certain types of spending and life styles in order for tax collection to improve.