The incidence of tax evasion on revenue mobilization in Ghana

Abstract

The very basis for the survival of every state is tax revenue which has been in existence for several centuries. It is argued that Ghana is unable to meet its developmental needs due to tax revenue losses and for this reason, several research has been undertaken to unravel the very root cause. The incidence of tax evasion especially within the informal sector is a major concern for developing states. After having seen some gaps in some earlier works, it was very important to launch research to unravel the incidence of tax evasion within the context of a very typical informal sector like Abossey Okai in Accra, Ghana, and to find its effect on tax revenue mobilization. The study sought to examine the magnitude of the problem and the factors leading to the same. Since tax evasion affects revenue mobilization, it was important to examine the revenue mobilization performance in Abossey Okai, while assessing the strategies being employed by the tax authorities to reduce tax evasion. The sample size used for the study was 306 tax payers and 10 GRA tax officers. The study employed the mixed method design and also adopted a survey approach where questionnaires were administered to both taxpayers and tax officers, followed up with interviews and investigations. Data was analyzed with the use of the SPSS. Analysis of the responses demonstrated that the rate of tax evasion in that enclave is very high and the main factor leading to tax evasion is lack of enforcement of the tax laws, contrary to most literature that suggests high tax rate and/or lack of education as a major factor. It was recommended to the GRA, among others, to enforce the tax laws to the latter, to institute a very stiff penalty for contravening any section of the law and above all to stop excessive political interference where the GRA‘s Commissioner General and the Commissioners must not be appointed by the government of the day.