Taxes are enforced exactions, not voluntary contributions to the state. Fines and penalties are designed to ensure compliance with tax laws. In spite of these enforcement mechanisms, the willingness of citizens to pay taxes plays an important role in tax administration.
Revenues mobilized from taxes provide governments with the funds they need to provide public services and invest in development projects. While one might assume that seeing such services and projects would make citizens more willing to pay taxes, studies have found that this is not necessarily the case (Castro & Scartascini, 2015; Bergolo, Ceni, Cruces, Giaccobasso, & Perez-Truglia, 2017). Instead, the willingness of citizens to settle tax liabilities has been found to be influenced by other factors, including their knowledge and understanding of tax rules and favourable perceptions of the effectiveness and fairness of the taxation system (Setyonugroho & Sardjono, 2013).
In Ghana, tax revenues have not matched rising public expenditures in recent years. From 2017 to 2018, government expenditures increased by 20%, while tax revenues grew by 17% (Ghana Statistical Service, 2020; Bank of Ghana, 2018).
The Ghana Revenue Authority (GRA) is responsible for administering tax laws via its Domestic Tax Revenue Division and Customs Division. To promote compliance, the GRA has instituted measures to make paying taxes easier and more convenient, including registration of all eligible taxpayers for a tax identification number (TIN) and the launch of an e-service portal for the payment of customs duties and other levies by importers and freight forwarders (Ghana Revenue Authority, 2020).
The GRA has also worked to enforce compliance, including by publishing a list of companies that had defaulted on their tax liabilities and closing down some of them (Ghana Revenue Authority, 2019a; Ghanaian Times, 2019).
In an effort to regularize tax affairs for defaulters and expand the tax base, the government announced a tax amnesty in 2018 allowing defaulters to clear their arrears without penalty, but the policy fell short of its target (Ghana Tax Authority, 2019b). In its 2021 budget statement to Parliament, the government announced an extension of interest waivers on defaulted taxes through September 2021 (Ministry of Finance, 2021).
But if compliance and enforcement measures alone do not ensure willingness to pay taxes, how might citizens’ views on taxes inform the government’s effort to collect needed revenues?
The most recent Afrobarometer survey in Ghana shows that most Ghanaians endorse taxation and are even willing to pay more in taxes to support the country’s development. But they also say it’s difficult to find out what taxes they owe and how tax revenues are used, and they see corruption in the GRA and tax evasion among their peers as widespread.