Menu
- 5 Marks
Question
Taxation system can be classified in many ways. It could be based on the method used in the computation of the tax or based on the incidence/responsibility for the payment of the tax.
Required:
Explain the structural or classification of the Ghanaian tax system.
(5 marks)
Answer
Structural and classification of taxes in Ghana:
Based on the method used for the calculation of the tax
- Proportional Tax: Tax levied at a fixed rate on the amount of income earned. E.g., a household earning GH¢10,000 and another earning GH¢10 million will both pay 10% of their income as tax.
- Progressive Tax: Tax rate increases with the amount of income. E.g., a household earning GH¢10,000 may pay 5%, while one earning GH¢10 million may pay 35%.
- Regressive Tax: Tax rate decreases as income increases. Typically seen in excise taxes.Based on who has the responsibility to pay the tax
- Direct Tax: The impact and incidence of tax fall on the same person, such as personal income tax, company tax, etc.
- Indirect Tax: The impact and incidence of tax fall on different people, such as VAT, excise tax, etc.
(5 marks evenly spread using ticks)
- Tags: Ghanaian Tax System, Tax Classification, Tax Structure
- Level: Level 2
- Topic: Overview of the Ghanaian Tax System and Fiscal Policy
- Series: MAY 2020
- Uploader: Cheoli