Does the Burden of Corporate Income Tax Borne By Labour Through Reduced Wage Rates or Labour Hours, Resulting in a Lower Cost of Labour to the Firm?

Desmond Tutu Ayentimi and Frank Osei-Yaw

Asian Economic and Financial Review, 2013, vol. 3, issue 10, 1281-1288

Abstract: Shareholders ability to shift the burden of the tax to the consumer or labour depends largely on the mobility of capital. If the investor can move from the corporate sector into the non corporate sector, the laws of supply and demand will cause some of the burden of the corporate income tax to be borne by others. The aim of this paper is to find out whether the burden of the corporate income tax may be borne by labour through reduced wage rates or labour hours, resulting in a lower cost of labour to the firm,using ten (10) years financial data from ten firms listed on the Ghana Stock Exchange. The result provides evidence that part of the tax burden is shifted backwards to labour. Both the actual and adjusted data used in the model confirmed the alternate hypothesis. The result also demonstrated that a 1% increment in the corporate tax would result in 11% fall in the burden of the tax on labour.

Keywords: Shifting; Corporate income tax; Labour; Ghana; Tax burden; Short-run. (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations:

Downloads: (external link)
https://archive.aessweb.com/index.php/5002/article/view/1088/1592 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:asi:aeafrj:v:3:y:2013:i:10:p:1281-1288:id:1088

Access Statistics for this article

More articles in Asian Economic and Financial Review from Asian Economic and Social Society
Bibliographic data for series maintained by Robert Allen ().