Taxation and Development in Ghana: Finance, Equity and Accountability
Taxation plays an important role in shaping the distribution of benefits, as it is the basis for redistribution from those with the highest incomes to those most in need, and allows government to encourage certain activities and discourage others by altering their
relative prices.
What is less frequently noted is the broader centrality of taxation to good governance, which encompasses the capacity, responsiveness and accountability of government. In the realm of capacity, taxation lies at the administrative heart of government and provides the foundation for the provision of public goods and the implementation of effective regulation. As importantly, taxation is the venue through which citizens are most intimately connected to the state and can be an important catalyst for public demands for responsiveness and accountability.
Despite this fact, attention to the issue of taxation in the developing world has been sorely lacking and generally limited to technocratic policy and administrative reforms. Public participation in debates about taxation has been particularly rare despite major issues of public interest related to tax system equity, tax avoidance and evasion and the broader drive for improved governance. This research forms part of a broader civil society effort to expand pubic participation in debates about taxation, and to correspondingly improve development outcomes.
The paper begins with a brief introduction to the economic, social and political context in Ghana, and this is followed by a detailed overview of the existing tax system and its limitations. The third section looks at tax avoidance and evasion in various forms in order to identify ways to both increase collection and improve equity. The fourth section looks at the relationship between taxation and the development of political responsiveness and accountability, focusing on the ways that taxation can become a catalyst for public demands for improved governance. The final section concludes and provides a set of recommendations for potential campaign targets and further research
relative prices.
What is less frequently noted is the broader centrality of taxation to good governance, which encompasses the capacity, responsiveness and accountability of government. In the realm of capacity, taxation lies at the administrative heart of government and provides the foundation for the provision of public goods and the implementation of effective regulation. As importantly, taxation is the venue through which citizens are most intimately connected to the state and can be an important catalyst for public demands for responsiveness and accountability.
Despite this fact, attention to the issue of taxation in the developing world has been sorely lacking and generally limited to technocratic policy and administrative reforms. Public participation in debates about taxation has been particularly rare despite major issues of public interest related to tax system equity, tax avoidance and evasion and the broader drive for improved governance. This research forms part of a broader civil society effort to expand pubic participation in debates about taxation, and to correspondingly improve development outcomes.
The paper begins with a brief introduction to the economic, social and political context in Ghana, and this is followed by a detailed overview of the existing tax system and its limitations. The third section looks at tax avoidance and evasion in various forms in order to identify ways to both increase collection and improve equity. The fourth section looks at the relationship between taxation and the development of political responsiveness and accountability, focusing on the ways that taxation can become a catalyst for public demands for improved governance. The final section concludes and provides a set of recommendations for potential campaign targets and further research
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