Tax reforms and revenue mobilization in Ghana

William Bekoe, Michael Danquah and Sampson Kwabena Senahey

Journal of Economic Studies, 2016, vol. 43, issue 4, 522-534

Abstract: Purpose - The 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/approach - This 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. Findings - The 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 implications - Tax 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/value - In 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.

Keywords: Ghana; Proportional adjustment approach; Revenue mobilization; Tax buoyancy; Tax elasticity; Tax reforms; H2; H20; H25; H26; H29 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jespps:v:43:y:2016:i:4:p:522-534

DOI: 10.1108/JES-01-2015-0007

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