Impact of Tax Administration and Compliance on Government Revenue Generation in Developing Countries, a Comparison of Ghana and Nigeria

• In Event: International Accounting 1

Abstract

The tax administration, compliance and the effectiveness of tax collection on revenue generation of governments in developing countries were examined. The paper investigated the developing countries of Ghana and Nigeria. It was found that collecting taxes in developing countries was an albatross. Citizens of these countries for the most part did not want to pay taxes. Most transactions in these countries were done by cash or under the table. There was a widespread lack of efficient record-keeping. A large informal sector existed in these countries which made revenue difficult to ascertain. This presented challenges to the revenue collecting authorities who had their own set of problems (lack of personnel and logistics including transportation among others). A comparison of taxes collected from the two countries revealed that even though Nigeria was much bigger and considered “giant” of Africa; Ghana, Africa’s promising emerging economy, generated more revenue than Nigeria. Tax revenues collected in Ghana had a higher percentage of gross domestic product (GDP) than that of Nigeria; revealing that Ghana’s tax administration, compliance and collection was more effective than that of Nigeria.

Authors

• Loretta Baryeh, Towson University

• Gertrude A Eguae-Obazee, Albright College

• Hyattcin Ezeka, Coppin State Universtiy