Effectiveness of tax system to revenue generation in Ghana_ a case of Kumasi metropolis

Abstract

This study evaluated taxation as a mechanism of revenue generation in Ghana. Relevant data were collected through primary and secondary sources. The secondary data covered period that span from 2008 to 2018 and were extracted from Ghana Statistical Service and the Ministry of Finance and Economic Planning. The primary data was through the use of close-ended questionnaire administered to tax officials within the Kumasi Metropolis and members of Chartered Institute of Taxation Ghana. The study used linear regression, Mann-Whitney U test and descriptive statistics to analysis the data collected. The study revealed that the contributions of taxation to domestic tax revenue over the period have been significant but not efficient and effective to solve Ghana’s budget deficit problem. The ineffectiveness of the tax system was as a result of numerous challenges faced by tax administrators and complex and opaque tax laws. The study concluded that the contributions of taxation to domestic revenue have been significant but not efficient and effective in Ghana, and for that reason the government must address the challenges faced by tax administrators and enact laws that would be simple to administer a good tax system and policy to increase revenue generation to meet government spending and elevate budget deficit.