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1 – 2 of 2John Kwaku Amoh, Kenneth Ofori-Boateng, Randolph Nsor-Ambala and Ebenezer Bugri Anarfo
This study explored the tax evasion and corruption–economic development nexus in Ghana and the moderating role of institutional quality in this relationship.
Abstract
Purpose
This study explored the tax evasion and corruption–economic development nexus in Ghana and the moderating role of institutional quality in this relationship.
Design/methodology/approach
To achieve this objective, this study employed the structural equation modelling (SEM) strategy and maximum likelihood (ML) estimation method on selected quarterised data from 1996 to 2020.
Findings
The study found that tax evasion has a positive impact on GDP per capita and urbanisation but a negative impact on the Economic Freedom of the World Index (EFWI). The study revealed that corruption has a positive relationship with GDP per capita but relates with EFWI inversely. Finally, the study found that institutional quality moderates the nexus between tax evasion and corruption and economic development.
Social implications
The findings imply that the quality of state institutions has a significant impact on the government's ability to control tax evasion and corruption in order to drive economic development.
Originality/value
One novelty of the study is the examination of the combined effects of tax evasion and corruption as exogenous variables in a single econometric model. Again, to moderate the multivariate relationships of the study, the principal component analysis (PCA) was used to create an institutional quality index. The study recommends that policymakers implement comprehensive tax evasion and corruption reduction strategies simultaneously in order to increase tax revenues for economic development and SDGs achievement.
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Keywords
John Kwaku Amoh, Kenneth Ofori-Boateng, Randolph Nsor-Ambala and Ebenezer Bugri Anarfo
Some African policymakers have turned their attention towards electronic transaction levy (e-levy) to maximise tax revenues in recent years due to the inability to meet revenue…
Abstract
Purpose
Some African policymakers have turned their attention towards electronic transaction levy (e-levy) to maximise tax revenues in recent years due to the inability to meet revenue targets. However, some argue that the implementation of an e-levy will increase the tax burden (TB) and the currency outside banks (COB). Primarily, this paper examined the effects of the TB and COB on economic development as well as the impact of institutional quality on moderating the nexus.
Design/methodology/approach
This paper used structural equation modelling (SEM) and maximum likelihood (ML) estimation techniques on quarterised data from 1996 to 2020.
Findings
The results show that the TB negatively impacts gross domestic product (GDP) per capita and urbanisation but positively affects the Economic Freedom of the World Index (EFWI). The COB impacts EFWI, GDP per capita and urbanisation positively. Institutional quality moderates the TB and the COB, establishing positive relationships with the economic development indicators.
Practical implications
The findings strongly imply that the arguments that TB and COB are catalysts for tax evasion and corruption lack substantial empirical evidence.
Originality/value
The examination of the econometric impact of the COB on economic development is one of the first studies in the field. The paper recommends that to drive economic development and accelerate sustainable development goals (SDGs) achievement, tax revenues should be channelled into the productive sectors of the Ghanaian economy.
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