The effect of taxation on economic growth in ghana
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Date
2023
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KNUST
Abstract
The study aims to examine the impact of taxation on economic growth in Ghana. Three main tax components; value-added tax, corporate income tax, and custom and excise duty were used to determine the tax variables whereas real gross domestic product was used to proxy the economic growth. Foreign direct investment and inflation were controlled. Literature was reviewed on the study variables with emphasis laid on Laffer Curve Theory and Endogenous Growth Theory as the theoretical base. Time series data was collected on the variables from the year 1990 to 2020 through secondary data sources. The stationarity of the data set was tested using a unit root test, and the relationship amid the dependent and independent variable quantity was calculated with the ordinary least square regression. Analysing the data collected, the model had high explanatory power (R-squared = 0.983). Among taxation variables, custom and excise duty had a significant positive effect on GDP, as did FDI, while corporate income tax and value-added tax did not show significant impacts. Inflation on the other hand had a negative coefficient which was not statistically significant, suggesting a potential negative relationship between inflation and economic growth.
Description
A thesis submitted to the department of accounting and finance department, kwame nkrumah university of science and technology, kumasi in partial fulfilment of the requirements for the award master of science in accounting and finance