Tax Policy, SMES Compliance, Perception and Growth Relationship in Ghana: An Empirical Analysis

Abstract

Tax plays a significant role in the growth of Small and Medium Enterprises (SMES). In a developing country like Ghana, SMES play important roles in the development of the economy. It is vital for policy makers to consider the alignment of tax policies to the growth needs of SMES. Government uses taxation and tax regimes to provide means for SMES to contribute their quota to the economic growth of Ghana. Placing emphasis on this issue, the paper critically analyses tax policy, SMES compliance, perception and growth relationship in Ghana. The specific objectives of this paper are: To find out if SMES comply with their tax obligations and policies; To examine SMES perception on tax policies; and To identify the effects of tax policies on SMES growth in Ghana. The research was primarily carried out at the Accra Metropolitan Assembly and it covers four markets of Kantamanto market, Makola market, Malata market and Dome Market. Respondents from these markets were small and medium business owners in operation from 2002 to 2015. The survey was administered using questionnaire and a total of 200 respondents were used with 50 respondents from each market. Data was analysed using SPSS version 21. Multiple regression analysis was employed in this study and the findings of this research indicated that majority of the respondents perceived adverse impact of tax policies on SMES compliance, growth and perception in Ghana. The findings will be beneficial to stakeholders in reforming measures to bridge tax policies to SMES in an efficient and effective manner.