An Assessment of Knowledge and Perception of Tax Obligation among Small Traders in the Obuasi Municipality of Ghana

Abstract

The survey assessed the knowledge and perceptual experience of tax obligation among small traders in the Obuasi Municipality of Ghana. The survey utilized a survey method integrating both quantitative and qualitative research methods. The survey employed a multi-stage sampling process to select 400 respondents. An interview schedule was used for the data collection. The study findings, respondents were asked if they were well-informed as to why they should pay the tax, 296 respondents forming 74% said no they were not well informed as to why they should pay the income tax to the state and 104 respondents said yes they were well informed as to why they should pay income tax, 296 (74%) respondents said they do not ‘enjoy’ the benefits of paying tax, 342 (88.5%) of the respondents said yes their perception on how government spends their tax influenced them to comply with their tax obligation and 104 (26%) said no there was no influence of how government spend their tax on their tax obligation. Regarding the payment of Income Tax to the Internal Revenue Service, 282 respondents representing 70.5% did not pay income tax while 118 representing 29.9% of the respondents did pay income tax. The study concluded that small traders in the Obuasi Municipality have less knowledge on their tax obligation to involve enthusiastically with the tax process, their perception on how government spends their tax influenced them to comply with their tax obligation and majority of the respondents do not pay their personal income tax thereby affecting the revenue base of the country. It is recommended that Ghana Revenue Authority in conjunction with state institutions, and civil society organisations should hold more regular and well-publicised public-awareness workshops and campaigns to the general public and there must be the introduction of a formal tax education in the early stages.

Keywords: Revenue mobilisation, tax obligation, Income tax, small traders, tax education