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Examining the Effects of the Stamp Tax Policy on the Compliance Behaviour of SME's in Ghana

Student: Bludoh Elliot dela

Supervisor: Yulia Leevik

Faculty: St.Petersburg School of Economics and Management

Educational Programme: Finance (Master)

Year of Graduation: 2020

Annotation This article examines the influence of the Tax Stamp policy on the tax compliance behaviour of small and medium-sized enterprises (SMEs) in Ghana. It further measured the compliance behaviour of SME operators about the policy and determined the influence of perceived fairness of the policy on the compliance level of the operators. The study found that perceived fairness has a positive influence on taxpayers compliance behaviour. Research Objectives: 1. To assess the perception of fairness of the SME operators about the Stamp Tax policy. 2. To assess the compliance behaviour of SME operators about the Stamp Tax policy. 3. To determine if the perceived fairness of the Stamp Tax policy has an effect on the compliance behaviour of operators of SME. Research Questions: 1. What is the perception of operators of SME about the Stamp Tax system? 2. What is the compliance behaviour of operators of SME about the Stamp Tax policy? 3. Does perceived fairness of the Stamp Tax policy has an effect on the compliance behaviour of operators of SME? Data and methodology: For the purpose of examining the effect of the Stamp Tax policy on the tax compliance behaviour of SMEs in chosen industries, a survey quantitative research method was used. The research is primarily an explanation study as it seeks to investigate the cause and effect of the Stamp Tax policy on the SMEs ' tax compliance behaviour. The research is cross-sectional, too, on a time scale. A structured questionnaire was used to collect information as the primary data collection tool. Only the self-employed people were included in the research in the three chosen industries. Using both descriptive and inferential statistics, data analysis was conducted quantitatively. Conclusion: 1. SME operators in the selected markets have general knowledge about the Stamp Tax policy. 2. The SME operators perceive that the Stamp Tax Policy is horizontally fair, personally fair, vertically fair, retributively fair and administratively fair but not generally fair and that it does not exhibit exchange fairness. 3. The SME operators are willing to comply with the tax policy and have so far largely complied with the policy. 4. Perceived exchange fairness, horizontal fairness, and personal fairness, administrative and vertical fairness have a positive influence on the taxpayers’ compliance behaviour, while general fairness and retributive fairness have a negative influence on the tax compliance behaviour of the operators of SMEs. References: Ali, M., Fjeldstad, O., and Sjursen, I. (2013). Factors Affecting Tax Compliant Attitude in Africa: Evidence from Kenya, Tanzania, Uganda and South Africa. Paper prepared for Centre for the Study of African Economies 2013 Conference Oxford, 17–19 March. Allingham, M. G., & Sandmo, A. (1972). Income Tax Evasion: A Theoretical Analysis. Journal of Public Economics, 1, 323–338. Alm, J. (2012). Measuring, Explaining, and Controlling Tax Evasion: Lessons from Theory, Experiments, and Field Studies. WP1213, Tulane Economics Working Paper Series, Tulane University. Becker, G. S. (1968). Crime and Punishment: An Economic Approach. Journal of Political Economy, 76, 169–217 Braithwaite, V. (2008). Tax Evasion, In M. Tonry (ed.). Handbook on Crime and Public Policy. Oxford: Oxford University Press Feld, Lars P. and Frey, B. S (2006). Tax Compliance as a Result of Psychological Tax Contract: The Role of Incentives and Responsive Regulation. Working Paper No. 287, Institute for Empirical Research in Economics University of Zurich. Fjeldstad, O., Schulz-Herzenberg, C., and Sjursen, I. (2012). Peoples’ View of Taxation in Africa: A Review of Research on Determinants of Tax Compliance. CMI working paper, WP2012: 7. Kirchler, E., Hoelzl, E. (2006). Modelling Taxpayers' Behavior as a Function of Interaction between Tax Authorities and Taxpayers, in H. Elffers, P. Verboon and W. Huisman (Ed). Managing and Maintaining Compliance. The Hague: Boom Legal Publishers McKerchar, M. & C. Evans (2009). Sustaining Growth in Developing Economies through Improved Taxpayer Compliance: Challenges for Policy Makers and Revenue Authorities. eJournal of Tax Research, 7, 171–201. Slemrod. J. (ed.). (1992). Why People Pay Taxes. Tax Compliance and Enforcement. Ann Arbor: University of Michigan Press. Singh, V. (2003). Malaysian Tax Administration. 6th ed. Kuala Lumpur: Longman. Spicer, Michael W. and Lee A. Becker. (1980). Fiscal Inequity and Tax Evasion: An Experimental Approach, National Tax Journal, 33: 171–75 Torgler, B (2003). Beyond Punishment: A tax Compliance Experiment with Taxpayers in Costa Rica: Revista de Analisis Economico, 18(1), 27–56.

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