Examining Income Tax Evasion and Its Effects on The Economy: A Case Study of Ghana Revenue Authority – (Domestic Tax Division and Traders in Sunyani Municipality)
The modern view of taxation stems from the common premise that no one can be an island for him or herself. In 1996, Moses, Williams and Salter defined tax as a compulsory levy collected by the government to fund public expenditure. The researcher’s purpose to this study is to delve into income tax and why income earners like traders evade income tax and to examine the effect income tax evasion has on the economy as well as the problems that tax administration faces in an attempt to mobilize tax revenue from traders in Sunyani municipality and offer solutions with suitable recommendations. For the purpose of convenience, Sunyani municipal was chosen as the study area. Respondents for this study shall be traders within Sunyani market and GRA (Domestic Tax Division) The study was to find out the problem connected with income tax evasion on the economy. The research revealed many problems on individuals’ attitude towards income tax. It was found out that their educational background were low. This was especially in the case of traders. Most of them were basic and secondary school leavers who had no in-depth education in taxes. Also, it was observed that the traders did not keep proper records, which makes it difficult to ascertain their correct and actual assessable incomes. In view of this, recommendations were made which I strongly believe that when these are comprehended to, it will ensure efficiency and effectiveness in the administration of income tax in Ghana.
Key Words- Income Tax, Tax Evasion, Tax administration, Assessable Income.