Tax evasion and the Ghanaian economy: evidence from Ghana revenue authority, Cape Coast Metropolis

Abstract

By far a lot of research has been done but the outcome of this study will strengthen the systems of GRA by way of employing all the necessary strategies probably going beyond what they do to close the loop holes thereby reducing the rate of tax evasion. The main objective of the study was to examine tax evasion and its effects on the Ghanaian economy with evidence from Cape Coast Metropolis. The research was a case study which blended both qualitative and quantitative methods in data collection and analysis in getting to the bottom of issues discussed. The population of the study were all the tax officials of the GRA and businesses in the Metropolis. Convenience sampling method were used to select 120 businesses and five GRA staff. With the help of SPSS version 16, all the results were analyzed using charts and frequency distribution tables. The study revealed that most tax payers lack the fundamental knowledge on the tax payment process. It was again found that even though the level of evasion was high, there were no evidence of sanctions applied to anyone found culpable. It was revealed also that both categories respondents were very much aware that tax evasion reduces government revenue thereby affecting governments’ ability to provide the citizenry with the needed infrastructural development. The researcher then recommended that the GRA in the Metropolis should embark on tax education on payment processes, and the importance of tax to the national economy. It again recommended that appropriate reviews of tax processes should be integrated into the entire tax system to encourage taxpayers’ compliance. The GRA should in their attempt to profile businesses and individual tax payers, collaborate with Electricity Company of Ghana since ECG has a complete data of all commercial structures, to help them in their search for people liable to pay taxes.