The Prevalence And Burden Of Black Tax In Ghana

Abstract

This study aimed at ascertaining the prevalence and the burden of black tax in Ghana. The concept of black tax is associated with the South African economy to describe the practice where internal migrants, transfer money to their extended families to help cushion the situation of poverty and vulnerabilities among other difficulties. The practice is ubiquitous as remittances, yet, the extant literature is restricted on the characteristics of remittance senders in Ghana and more specifically, the assistance individuals provide to families, as understood in the South African context. This study situates this phenomenon within the Ghanaian social context, and as an exploratory study seeks to investigate the nature, the prevalence, and the burden of black tax and the motivating factors that shape it in Ghana. Questionnaires and interviews formed the sources of primary tools used in the data gathering. A mixed-method research design (quantitative and qualitative) was adopted. The population of the study was made up of all local government service employees (LGSEs) in Metropolitan, Municipal, and District Assemblies (MMDAs) in the Greater Accra Region of Ghana. With the help of a multi-stage sampling strategy including stratified and simple random sampling techniques, 190 employees were recruited to participate in the study, of which 25 participated in an in-depth interview. A semi-structured questionnaire, and an in-depth interview were used in collecting quantitative and qualitative data, respectively. The qualitative data were transcribed, summarized, and classified in relation to the study objectives. The quantitative data were analyzed using Descriptive statistics (frequency, mean, and standard deviation) and Inferential statistics (Exploratory Factor Analysis) and presented in tables, and pie charts with the aid of the SPSS-version16. The results generally, highlight a significant prevalence of black tax but, is burdensome on respondents. Findings from the study revealed that more than half of respondents (69.5%) had dependents outside their nuclear family. The intended purpose for sending black tax to respondents was mostly for consumption/upkeep, education, healthcare, funeral occasions/ceremonies, business, and for religious contributions. Results from the Exploratory Factor Analysis also revealed that unemployment, old age/retirement, an act of kindness/sense of obligation, a feeling of indebtedness to parents, financial constraint, socio-cultural/family values, being gainfully employed or having a regular/stable source of income, perception of being rich, and expectations due to professional career position were factors that contributed to the prevalence of black tax/local remittance among respondents. Likewise, stress, pressure, budget deficits, loss of focus, and less or no funds to save or invest, as well as inadequate maintenance of respondents’ nuclear families were stated as the burden that black tax exerts on senders. Finally, the study recommends that government should review and expand its social protection programmes to reduce the burden on remitters and their households, as well as improve the salary structure of public servants.