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Tax reforms and revenue mobilization in Ghana

Tax reforms and revenue mobilization in Ghana PurposeThe purpose of this paper is to comprehensively examine Ghana’s tax reform programme and investigate whether it has facilitated the revenue mobilization capacity of the overall tax system and of individual taxes on the basis of estimates of tax buoyancies and elasticities.Design/methodology/approachThis study uses the proportional adjustment approach to estimate tax buoyancies and elasticities of the overall tax system and of individual taxes for the pre and post tax reform period over the 1970-2013 period.FindingsThe results show that in general, tax reforms had a positive influence on the overall tax structure and on the individual tax handles as evidenced in the more than unity buoyancy and elasticity. All the individual taxes, except excise duties, recorded buoyancies and elasticities of more than unity during the reform period.Practical implicationsTax authorities ought to move away from income-based taxation which discriminates against saving and investment, in favour of consumption-based taxes in conformity with international standards. Emphasis must also be placed on those taxes that have high revenue elasticities. These taxes include the personal, corporate, the Value Added Tax, and the import duties.Originality/valueIn this study, the paper extends and disaggregates the data on taxes, account for discretionary tax changes from the historical time series data, and use the adjusted historical time series data to estimate tax elasticity. The study therefore provides an in-depth understanding of the effects of the tax reforms on the overall tax system and of individual taxes in Ghana. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economic Studies Emerald Publishing

Tax reforms and revenue mobilization in Ghana

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References (24)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0144-3585
DOI
10.1108/JES-01-2015-0007
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this paper is to comprehensively examine Ghana’s tax reform programme and investigate whether it has facilitated the revenue mobilization capacity of the overall tax system and of individual taxes on the basis of estimates of tax buoyancies and elasticities.Design/methodology/approachThis study uses the proportional adjustment approach to estimate tax buoyancies and elasticities of the overall tax system and of individual taxes for the pre and post tax reform period over the 1970-2013 period.FindingsThe results show that in general, tax reforms had a positive influence on the overall tax structure and on the individual tax handles as evidenced in the more than unity buoyancy and elasticity. All the individual taxes, except excise duties, recorded buoyancies and elasticities of more than unity during the reform period.Practical implicationsTax authorities ought to move away from income-based taxation which discriminates against saving and investment, in favour of consumption-based taxes in conformity with international standards. Emphasis must also be placed on those taxes that have high revenue elasticities. These taxes include the personal, corporate, the Value Added Tax, and the import duties.Originality/valueIn this study, the paper extends and disaggregates the data on taxes, account for discretionary tax changes from the historical time series data, and use the adjusted historical time series data to estimate tax elasticity. The study therefore provides an in-depth understanding of the effects of the tax reforms on the overall tax system and of individual taxes in Ghana.

Journal

Journal of Economic Studies – Emerald Publishing

Published: Sep 12, 2016

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