Towards revenue maximization: a case study of Ghana Customs, Excise and Preventive Service (CEPS)

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The collection of tax is fraught with many malpractices by both the collectors and the tax payers. This leads to the loss of revenue to the Government The method and administration of taxation in Ghana cannot be left out in considering factors that precipitate the loss of revenue, by way of noncompliance by tax payers In this study, Ghana Customs, Excise and Preventive Service (CEPS) was used as case study to focus on administrative and operational practices such as the method of imposition of tax rates, provision of logistics and motivation, and the identification of tax evasion activities with a view to prescribing solutions to the above problems and recommending strategies for revenue maximization. Secondary data was obtained from the service headquarters whiles questionnaires were administered to Importers/Clearing Agents and CEPS officials to collect views on reasons for tax evasion and other non-compliant practices. The study has revealed most of the tax evasion strategies used by Importers and Clearing Agents. For instance, it was discovered that among the major strategies used are the falsification of import clearance documents and the diversion of warehoused goods The study also revealed among others the Optimum Import Duty rates applicable to certain selected commodities, such as Electrical and Tobacco products. i.e. 15.4% and 21.6% respectively These optimum rates do not only compel Importers to be tax compliant, but also yield maximum revenues It has also revealed the grievances of CEPS officials and the reasons for their connivance with some Importers to evade tax. Most CEPS officials cited various reasons for their involvement in tax evasion. Among them are poor working conditions and low levels of salaries and motivation. It was also observed that delays and frustrations are some of the reasons why most Importers/Clearing Agent bribes CEPS officials in order to have their goods cleared quickly. This results in familiarization between the two, followed by trust and finally plots and conspiracies to dupe the nation of several millions of cedis through tax evasion. Another interesting observation was that tax evasion is enhanced by the constant pressure and stress on CEPS officials as a result of the substantial work load and long hours of work without break. These conditions make the CEPS officials reluctant to carry out intensive scrutiny of documents and examination of cargo. Finally, recommendations for revenue maximization were made
A thesis presented to the Board of School of Graduate Studies in partial fulfilment of the requirements for the award of Master of Business Administration, 2004