The role of value added tax in the economic development of Ghana - a case study of Vat Service, Ho Municipality

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One of the most difficult things to understand is the concept of Taxation. But understand we must, because it is a critical part of how government affects lives of Ghanaians. Unfortunately, though, when tax return enters the political domain, the subtleties of the key issues are usually lost in the mist of self-serving arguments and misleading implications. Taxation is not just a means of transferring money to the government, to spend as it thinks fit, but also has a tendency to reflect prevailing social values and priorities. In this respect, it would be argued that a system of taxation is a socio-economic model, representing society’s social, Political and economic need, at any one times; changes in these needs often being reflected by changes to the system of taxation. The main objective of this study is to know whether the imposition of VAT has had any effect on the Ghanaian economy. The study examined the previous sales tax regimes as against the new VAT regime. This was done through collection of data from various stakeholders including Retailers, Wholesalers, Manufacturers, Service Providers, and Consumers. Analysis of data collected revealed that, there has been a consistent increase in tax revenue in the VAT regime as compared to the previous sales tax regime. Also Corporate Institutions improved their liquidity as a result of VAT refunds. Similarly, there has been a tremendous improvement in the Utilization of VAT revenue in Education and the Health sector such as Ghana Educational Trust Fund (GETFund) and National Health Insurance Scheme (NHIS) which affect every Ghanaian life. In contrast, consumers also believe that the introduction of VAT was rather a curse than blessing since it increase consumer price index. However, the outcome of the study revealed to the researcher that, the VAT regime has positively affected the Ghanaian economy.
A Thesis presented to the Institute of Distance Learning, Kwame Nkrumah University of Science and Technology, Kumasi, in partial fulfillment of the requirements for the award of the Commonwealth Executive Masters In Business Administration (CEMBA) Degree.