assessment of payment of income tax in the informal seactor: a case study of Cape Coast tax district

Abstract

The Millennium Development Goals is a key scheme of the United Nations to empower all nations to develop using their own resources. The scheme aims at assisting nations to realize potential areas of the economy from which revenue can be generated for national development. National revenue is raised through direct taxes, indirect taxes, royalties, etc. The formal and informal sectors of the economy contribute in mobilizing revenue for national development. While the formal sector is well structured to prevent evasion of taxes, the informal sector is not well organized and various researchers in Ghana have observed the poor generation of revenue from the informal sector. In this study, , the researcher used Cape Coast, Elmina, Mankesim and adjoining communities with a sample size of 200 informal sector operators. Primary data was mainly used with mostly closed–ended questions and multiple answers provided to limit respondents to choices to select from. Analysis of data collected established that the factors that make the informal sector hard-to-tax were very high in Ghana as a result of the predominance of cash transactions, poor record keeping, high illiteracy rate, little or no barriers to entry, and the peripatetic nature of the informal sector in Ghana. It is recommended that government should embark on capacity building, tax information and education, and simplification of filing procedures to aid in revenue mobilization from the informal sector.