1.0 INTRODUCTION

Taxation plays a critical role in financing development, as well as ensuring equitable access to

public goods and services. Taxation, again, provides the framework through which citizens

become connected to the state, and constitutes an empowering factor that enhances the

demand side of social accountability.

However, tax administration in Ghana, like in many other jurisdictions, faces problems

associated with low level of compliance with tax obligations, which invariably affects the

capacity of the state to mobilise adequate domestic revenue to finance the country’s

development programmes and activities. Ghana’s inability to maximize its tax collection is

compounded by the dominance of the informal sector, which often proves more difficult to

document for tax purpose. A Ghana Statistical Service (GSS) report on the mean annual

expenditure by Ghanaian households for various purposes, puts tax (including other national

levies) as among the least ranking with 7.7% compared even to gifts and presents (excluding

remittances) at 21.7% (Table 1 below). This is clear indication of a generally low tax per capita

expenditure of the average Ghanaian resident.

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