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Estimating Ghana's Tax Capacity and Effort

Author

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  • William Gabriel Brafu-Insaidoo
  • Camara K. Obeng

    (Department of Economics, University of Cape Coast, Ghana)

Abstract

The main objective of the study is to estimate and analyse Ghana’s tax potential and effort and to determine how much more tax the country could generate based on its desired expenditure needs. To achieve this objective, a stochastic tax frontier model has been analysed using annual secondary data, covering the period 1985 to 2014. The analyses indicate that an increase in the taxable base and institutional improvements help to increase Ghana’s optimum tax potential. The study also reveals that political institutional improvement reduces inefficiency in Ghana’s tax system. In addition, the study finds that Ghana has enough of a tax gap to be exploited to meet its rising expenditure needs.

Suggested Citation

  • William Gabriel Brafu-Insaidoo & Camara K. Obeng, 2020. "Estimating Ghana's Tax Capacity and Effort," Working Papers 388, African Economic Research Consortium, Research Department.
    • Handle: RePEc:aer:wpaper:388
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    Cited by:

    1. Nahoussé Diabaté & Mounoufié V. Koffi, 2023. "Analysis of tax effort in WAEMU: How important are institutional/administrative reforms?," African Development Review, African Development Bank, vol. 35(1), pages 1-10, March.
    2. John Kwaku Amoh, 2019. "An Estimation of the Taxable Capacity, Tax Effort and Tax Burden of an Emerging Economy: Evidence from Ghana," International Journal of Economics and Financial Issues, Econjournals, vol. 9(3), pages 12-21.

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