River Basins Hydropower Study:
Bank of Ghana Taxes on domestic goods and services include sales tax, excise duty and petroleum taxes. Petroleum taxes have been the major source of revenue within this sub-category although its share of total revenue has declined since Petroleum taxes accounted for However, with the petroleum price increases of about International trade taxes cover import duty, sales tax on imports, special taxes, cocoa duty, lumber and other taxes, with the major sub-categories being import duty, sales tax on imports and cocoa duty.
Cocoa duty has been the major source of international trade tax receipts in Ghana.
Whereas cocoa duty as a percentage of total revenue declined from In general, international trade taxes have decreased over the years. Indomestic VAT accounted for 10 per cent of total revenue but declined and by accounted for 7.
Meanwhile, external VAT on imports accounting for The most cited study is by Youngerwhich uses a partial equilibrium analysis to assess the distributional impacts of various taxes in Ghana.
A more recent study by Colatei and Round uses a SAM-based CGE model to simulate the financing of povertyalleviating transfers through various tax instruments. Results from these studies are mixed.
Results from the study show that direct taxes are progressive while indirect taxes are proportional.
On some of the more specific indirect tax instruments, it is found that petroleum taxes are progressive with a coefficient that nearly matches that for direct taxes. Taxes on alcoholic beverages and tobacco products are found to be regressive. Consequently, it is argued in the paper that complaints about gasoline price increases falling disproportionately on the poor are unfounded Younger Indirect taxes may have important spillover effects that may not be captured by incidence analysis alone.
Therefore the study by Colatei and Round provides a better basis for looking at the welfare impact of various taxes in Ghana. The study by Colatei and Round uses a multisectoral CGE model to assess a range of redistributive policies on poverty incidence in Ghana.
More specifically, they examine the general equilibrium effects of a targeted programme aimed at eradicating extreme poverty. As a first step, they estimate the total transfers necessary to eliminate poverty in each of the household groups in the model.
In the analysis, the government is assumed to finance its programmes by increasing existing tax rates or introducing potentially new taxes. These authors then consider the consequences of three alternative financing schemes for these poverty-alleviating transfers. The financing schemes considered in the study are increases in income taxes, domestic commodity taxes, and import duties.
Attention is limited to transfer schemes that target each socioeconomic group separately.
Generally, their results show that income transfers targeted at any one household group have important spillover effects for other groups so that poverty is not totally eradicated for that group. The results from the study by Colatei and Round highlight the differences in the effect on poverty of the various tax schemes used to finance these transfers.
The poverty-reducing effects of the transfers are the greatest when they are financed with direct taxes. In other words, the indirect or spillover effects tend to be lower for direct taxes than for indirect income taxes.
Import duties are found to be the least effective way of raising revenue to finance poverty-alleviating transfers. Changing the model assumptions from the short- to long-run re-enforces these conclusions. They argue that the results, which suggest that petroleum taxes are progressive in Ghana, may be misplaced if one considers the kinds of spillover effects alluded to by Colatei and Round In fact, Addison and Osei present a hypothesis, which challenges this particular result from the study by Younger In spite of the mixed results with respect to the distributional effects of petroleum taxes, there is common ground within these two main studies i.
This conclusion is consistent with the results of some other studies that look at the distributional impact of taxes see, for instance, the Younger et al.
The results from these studies have important implications for the distributional effects of taxes in Ghana over the s. There seems to be a gradual shift from indirect to direct taxes from to Direct taxes as a share of total domestic tax revenue increased from about 28 per cent in to about 33 per cent inwhile indirect taxes decreased from about 72 per cent to about 67 per cent.Helsinki: unu-wider research paper number /71 provided a comparison of the world institute for development optimal taxation and other actors within the intenational arena.
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