English

Adjei Ntiamoah Jones,Christian Winful Ernest,Sarpong Jnr. David

doi:10.5897/jat2019.0367

Abstract

The purpose of this study was to establish whether tax compliance intentions of tax-registered self-employed persons are still influenced by economic variables instead of non-economic variables which are now at the centre stage in tax compliance research. A quantitative research design based on a survey of 453 self-employed persons randomly selected from 15 Small Taxpayers’ Offices across the Greater Accra region was used. Data was analysed using the Statistical Package for Social Sciences (SPSS) version 24 software complemented with a correlation analysis and validated using multiple regression and one-way analysis of variance. Results indicate that if the Ghana Revenue Authority (GRA) conducts frequent audits on business records and activities, and imposes lower tax rates on self-employed persons, a moderate but positive effect on tax compliance could be achieved. The results also indicate that higher fines could have a moderate negative effect on tax compliance decisions. Lastly, the level of income of self-employed persons was found to have weak but positive effects on their tax compliance intentions. The overarching results from this study indicate that economic variables do have positive but moderate effects on tax compliance intentions of self-employed persons in developing economies. It was recommend that the tax administration authority should not place too much emphasis on higher fines and imposition of higher income tax rates to encourage voluntary compliance, but instead, should place more emphasis on auditing of records and returns, and engage and provide holistic support to enable self-employed persons to grow and expand their businesses. Key words: Tax, compliance, self-employed persons, Ghana, underreporting.

Highlights

Every governemnt requires all taxable persons to honestly declare the full extent of their incomes for tax purposes
The findings made from this study are mirrored in the observation made by BǍTrÂNcea et al (2012), which says that developing and using adequate strategies to unearth the reasons, which drive taxpayers‟ compliance decisions, should be more useful to tax administrators and tax policy makers than strictly applying the tax laws and regulations to enforce compliance
This study explored the relationships between higher income tax rates, fines, audit probability and income level and tax compliance intentions of self-employed persons in Ghana surveying the registered Self-employed persons in the 15 Small Taxpayers „Offices in the Greater Accra tax jurisdiction

Summary

Introduction

Every governemnt requires all taxable persons to honestly declare the full extent of their incomes for tax purposes. The study observed that self-employed persons‟ taxpaying intentions are largely influenced by the economic model The implication of this finding is that, these taxpayers are still at the basic level of tax compliance and may not have reached the advanced form of compliance which is mostly non-economic. The study is unique in Ghana because it is the only study that has combined the four principal economic models in a single study to predict the tax compliance level of self-employed persons We believe that this prediction model could be extended to non taxregistered self-employed persons operating in the shadow economy if data is obtainned on them. Getting this group of taxable persons into the tax net could help reduce budget deficit in developing economies. This study finds that taxpaying intentions in the developing economies are still largely influenced by economic factors

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Conclusion