However the extent to which indirect taxes can be passed on to third parties

However the extent to which indirect taxes can be

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§ However, the extent to which indirect taxes can be passed on to third parties depends heavily on the market conditions . § In Ghana, just as in most other developing countries, indirect taxes contribute the bulk of tax revenue. § Ad valorem and specific duty / tax Prof. M. Amidu, Mr. R. Togormey & Mr. A. Ali-­‐Nakyea
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Forms of Taxes § Indirect tax can be further classified into Ad valorem or Specific duty. § With Ad valorem duty, the value of the goods or service is the tax base. § With Specific duty , the volume of the goods or service is the tax base. Prof. M. Amidu, Mr. R. Togormey & Mr. A. Ali-­‐Nakyea
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Forms of Taxes Contribution of tax to Revenue § Though taxes contribute over 80% of total government annual revenue, only an average of 25% of this come from direct taxes. Over seventy (70%) per cent of annual tax revenue is obtained from indirect tax. § The main sources of government revenue are: Taxes on international transactions; Taxes on domestic goods and services (including petroleum tax); Taxes on income and property; Non-tax revenue, and Grants. Prof. M. Amidu, Mr. R. Togormey & Mr. A. Ali-­‐Nakyea
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Forms of Taxes § These sources have contributed different proportions towards the revenue targets of the government. § Over the period, taxes on international transactions contributed, on the average 40% of revenue as against an average of 20% contributed by taxes on domestic goods and services, of which the share of petroleum taxes was about 30%, especially between the period 1989 and 2004. § Taxes on income and property , which are paid mainly by employees and self-employed persons in the economy, contributed 20% of total tax revenue. Prof. M. Amidu, Mr. R. Togormey & Mr. A. Ali-­‐Nakyea
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Forms of Taxes § Over the period, therefore, it is clear that a relatively greater burden of the nation’s tax revenue had been borne by importers of goods into the country and exporters of goods to other parts of the world (Indirect taxes). § Export duty on cocoa alone had contributed on the average about 20% of total tax revenue. Prof. M. Amidu, Mr. R. Togormey & Mr. A. Ali-­‐Nakyea
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Forms of Taxes Progressive, proportional and regressive tax § Progressive, Proportional and Regressive Taxes are taxes classified according to their structure of incidence. Progressive Tax: § It is a tax regime of which the ratio of tax liability to income or other tax base rises as income or other tax base increases. § In other words, the rate applied to the base increases with the value of the base. § It means a greater percentage of income is taxed as income increases and it is described as a graduated form of taxation. Prof. M. Amidu, Mr. R. Togormey & Mr. A. Ali-­‐Nakyea
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Forms of Taxes Proportional Tax: § A tax regime is said to be proportional if the ratio remains constant, which means taxing the same percentage of income at any level of income or expenditure. § It implies that the rate applied to the base does not change with the value of the base. Regressive Tax: § It is a tax regime in which the tax ratio falls as income increases. The rate applied to the base decreases with the value of the base. § It means a smaller percentage of income is taxed as income increases.
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