INDIRECT TAX BURDEN IN GHANA: ANALYSIS OF HOUSEHOLD POVERTY BY KURUBUNI RAHMAN EVANS (ID. NO. 10329863) THIS THESIS IS SUBMITTED TO THE UNIVERSITY OF GHANA, LEGON IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF DOCTOR OF PHILOSOPHY IN DEVELOPMENT STUDIES DEGREE INSTITUTE OF STATISTICAL, SOCIAL AND ECONOMIC RESEARCH (ISSER) DECEMBER 2023 University of Ghana http://ugspace.ug.edu.gh i DECLARATION I state that this thesis is the outcome of my independent research, which was carefully supervised. I certify that this thesis is unique and has never been submitted in whole or in part for academic credit at the University of Ghana or any other institution. Additionally, I affirm that all citations to other works have been properly cited. University of Ghana http://ugspace.ug.edu.gh ii ABSTRACT The focus on taxation as a primary revenue source for development financing in Least Developed and Middle-Income Countries, and consistent tax reviews raise questions on the potential impact of taxes on household welfare and inequality. In Ghana, poverty is gradually declining due to significant progress in economic growth and the effect on the welfare of households via several welfare intervention strategies. Since assuming constitutional authority, Ghana has embraced a myriad of strategies to reduce poverty, including free education, subsidies for fishermen's fuel, scholarships, skill-training programmes, and school feeding initiatives. Introducing social protection initiatives like Ghana's Livelihood Endowment Against Poverty (LEAP), which focuses on the most vulnerable and impoverished people, shows that the income strategy for eradicating severe poverty is effective. Financing poverty intervention programmes therefore requires a substantial amount of money, often collected through taxes (direct and indirect) Ghana also hopes to develop without the support of foreign aid. However, tax collections and tax-to-GDP ratios are not encouraging compared to some African countries. The tax system and its amendment have not also produced the required results. Despite the developments, consistent tax reviews raise debate on how tax reviews influence various segments of household welfare. The foundation of the study is on the premise of some concerns. First, although there is a wealth of literature on fiscal incidence, inequality, and poverty, there is little information on the anti-poverty aspects of taxation. The impact of taxes on people experiencing poverty in third-world nations has also diminished, partly because the taxes collected don't cover the costs of social programmes that help people experiencing poverty. Few studies also focus on fiscal incidence and poverty relationships and often do not consider a more comprehensive discussion of extended household demographic variables. The study builds on the weakness of the CEQ approach, such as the inclusion of income to analyse the net fiscal University of Ghana http://ugspace.ug.edu.gh iii impact on poverty and the exclusion of behavioural effects. The study, therefore, employed the Explanatory Sequential Mixed Method Design and supported by the philosophical underpinnings of pragmatism. The GLSS rounds 6 and 7 survey data, tax tariffs, and schedules were used, after which the findings informed the use of a Constructive Grounded Theory (CGT) approach to theoretically sample appropriate households for in-depth interviews on how families respond to tax reviews. The results show that household tax burdens are not static but vary according to household socio-demographic characteristics and consumption items. Total indirect tax incidence is generally higher for lower-income households compared to higher-income households for both periods, suggesting a form of regressivity, and is high among male-type households, such as male-headed, male-dominated, and male-breadwinner homes. Total tax incidence is regressive at 15% and progressive at 12.5%. The import tax burden is consistently high on households in the Northern region. While fuel taxes remain progressive, excise tax incidence is regressive. Consumption expenditures on food, clothing, fuel, and housing are the primary contributors to high household burdens. Food burdens are regressive for female-headed and female breadwinner households. Regionally, while food burdens are high among households in Western and Central regions, utility burdens are higher for the Ashanti and Greater Accra regions. High rural tax incidence on food could be attributed to own produce consumption. The study established that total indirect tax reduces household welfare regardless of the episode; hence, the poverty and squared poverty gaps after-tax increase on average. The strength of the effect also depends on household demographic characteristics. Female-headed and female-dominated households are less poor than male-headed households, while poverty is endemic among rural localities compared to urban localities. The study results further show that education is critical to poverty reduction, while poverty is reduced for households with heads employed compared to those unemployed. The findings reiterate the relevance of University of Ghana http://ugspace.ug.edu.gh iv improving the agriculture sector as the sector plays a crucial role in food security and household incomes. Poverty incidence after tax is high among households with heads who are employed in the Agricultural sector. Families' understanding and awareness of taxes vary depending on the location and the gender of the household head. While there is no variation in tax knowledge and awareness within the locality by gender of headship, differences exist between the locality and between the gender of the household head by locality. The qualitative part of the study reveals that tax awareness is high among urban households compared to rural counterparts. Most households in the Upper West Region eat staple foods and occasionally purchase imported goods subject to import duty and import VAT. Although stews and soups frequently comprise a large portion of a rural household's total food cost, rural households primarily consume local crops, mainly their produce. Urban households continue to change their consumption in times of rising prices but frequently adopt replacements, whereas rural households do not fluctuate much in their soup intake. The study recommends that interventions for significant poverty reduction should focus on a reduction in the size of the household, and improvement in education, and employment opportunities, as such aspects prove significant in improving household welfare amid taxes. Also, the study recommends a reduction in consumption taxes, particularly VAT and import taxes. The taxes increase poverty and are generally regressive at high rates. Finally, policymakers should simulate the likely effect of tax policies on households before administration, while avoiding the cascading approach to tax assessment. While simulations provide the opportunity to implement tax policies that do not compromise household welfare, removing the approach to assessment will also reduce tax burdens. University of Ghana http://ugspace.ug.edu.gh v DEDICATION To my mother, Esther; my brothers Obrian and Cajetan, my sister, Hilda, my wife Evelyn, my late father, Joseph Kurubuni Bukari; and my large family. University of Ghana http://ugspace.ug.edu.gh vi ACKNOWLEDGEMENTS I thank my supervisors, Prof. Isaac Osei-Akoto, Prof. Mohammed Amidu, and Prof. Peter Quartey, for their direction and insightful comments, which profoundly influenced this work. I am also indebted to Prof. William Steel and Prof. Imraan Valodia for their invaluable contributions to the thesis via literature and suggestions. I appreciate the German Academic Exchange Service (DAAD) for funding my studies. The Institute of Statistical, Social and Economic Research (ISSER), the Ghana Private Roads Transport Union of Trade Union Congress (GPRTU), and the National Petroleum Authority (NPA) made my studies delightful by making essential resources available to me. My profound appreciation goes to the Ph.D. Coordinators: Dr. Martha Awo (Immediate Past) and Dr. Ama Fenny (Current), Prof. Robert Darko Osei, Prof. Adobea Yaa Owusu, Dr. Simon Bawakyilenuo, Prof. Augustine Fosu, Dr. Kofi Asante, Dr Atta-Ankomah and all the Faculty members and fellow PhD students of ISSER. It meant a lot that others were encouraging me in the hallways. I appreciate the support of the Administrator of the ISSER Graduate Office, Ms. Damaris Adjei Frimpong, and all her assistants for their timely help during my study period. The acknowledgment will not be complete without the recognition of Prof. Mavis Dako-Gyeke (Dean, College of Humanities) and Prof. Frimpong-Manso (Dept. of Social Work) I am also indebted to my Ph.D. Development Studies Programme colleagues at ISSER for the invaluable support, Innocent Agbelie, Petronella Munemo, Victoria Wilson, Benjamin Bonzo, and Stephanie. I am grateful to many friends, especially Busha Ligbi (Narcotic Control Commission), Enock Owusu Sekyere (Ghana Prison Service), Isaac Kofi Kwakye (Ecobank Ghana Limited), Bernice Agyeiwaa (Central University), Dr. Abdullai Tahiru, Wilhelmina Manford (Head, Warehousing Unit, Ghana Customs, Tema) and My office assistants for their support and encouragement. Finally, I want to thank my family: my mom, Ms. Esther Yengeh, my siblings Obrian, Cajetan, and Hilda, as well as Evelyn Atampugre. Thank you for your encouragement and many forms of support. God bless you, everyone, and I love you all. University of Ghana http://ugspace.ug.edu.gh xii Table of Contents DECLARATION ........................................................................................................................ i ABSTRACT ............................................................................................................................... ii DEDICATION ........................................................................................................................... v ACKNOWLEDGEMENTS ...................................................................................................... vi LIST OF FIGURES ............................................................................................................... xvii LIST OF ABBREVIATIONS ................................................................................................. xiv CHAPTER ONE ........................................................................................................................ 1 INTRODUCTION ..................................................................................................................... 1 1.1 Background ...................................................................................................................... 1 1.2 Problem Statement ........................................................................................................... 7 1.2.1 Main Research Question ............................................................................................. 10 1.2.2 Research Objectives ................................................................................................ 10 1.3 Significance of the Study ............................................................................................... 11 1.4 Organization of the Study .............................................................................................. 11 CHAPTER TWO ..................................................................................................................... 14 TAX AND POVERTY REDUCTION .................................................................................... 14 2.1 Introduction .................................................................................................................... 14 2.2 Measurement of Poverty ................................................................................................ 14 2.3 Global Poverty Trends ................................................................................................... 17 2.4 Poverty in Ghana................................................................................................................ 18 2.5 Taxation in Ghana .......................................................................................................... 20 2.5.1 Fiscal Revenue Projections ..................................................................................... 20 2.6 Empirical Literature Review .......................................................................................... 30 2.6.1 Tax, Economic Growth, and Poverty ...................................................................... 30 2.6.2 Incidence of Taxes .................................................................................................. 32 2.6.3 Indirect Tax and Poverty ......................................................................................... 39 University of Ghana http://ugspace.ug.edu.gh xiii 2.6.4 Response to Taxes................................................................................................... 50 2.6 Summary ........................................................................................................................ 54 CHAPTER THREE ................................................................................................................. 55 THEORETICAL AND CONCEPTUAL FRAMEWORK ...................................................... 55 3.1 Introduction .................................................................................................................... 55 3.2 Theory of Tax Incidence ................................................................................................ 55 3.3 Consumer Behaviour Models ........................................................................................ 57 3.3.1 The Stimulus-Response Model (SRM) of consumer behaviour/decisions ................. 58 3.4 Power Resource Theory of Poverty (political strand).................................................... 59 3.5 Conceptual Framework .................................................................................................. 61 CHAPTER FOUR .................................................................................................................... 65 METHODOLOGY .................................................................................................................. 65 4.1 Introduction .................................................................................................................... 65 4.2 Philosophical Assumptions ............................................................................................ 65 4.3 Research Design............................................................................................................. 66 4.4 Data of the Study ........................................................................................................... 67 4.4.1 Quantitative Data .................................................................................................... 67 4.4.2 The Ghana Living Standard Surveys ...................................................................... 67 4.5 Analytical Techniques ................................................................................................... 69 4.6 Empirical Models ........................................................................................................... 70 4.6.1 Tax Incidence Analysis ........................................................................................... 70 4.6.2 Poverty Measures .................................................................................................... 73 4.6.3 Variables in the Study ............................................................................................. 74 4.6.4 The Effects of Various Taxes on Poverty ............................................................... 77 4.5.5 Empirical Model Specification: Tax and Poverty ................................................... 78 4.7 Model Justification......................................................................................................... 80 4.8 Cost of living adjustments ............................................................................................. 80 4.9 Key Assumptions ........................................................................................................... 81 University of Ghana http://ugspace.ug.edu.gh xiv 4.10 Definition of Concepts ................................................................................................. 81 4.11 Qualitative Research Approach ............................................................................... 83 4.11.1 Research Design.................................................................................................... 83 4.11.2 Sampling ............................................................................................................... 83 4.12 Data Collection Methods ............................................................................................. 85 4.12.1 In-depth Interviews ............................................................................................... 85 4.12.2 Field Notes ................................................................................................................ 85 4.13.3 Observation ........................................................................................................... 86 4.13 Qualitative Data Handling ........................................................................................... 86 4.13 Ethical Consideration ................................................................................................... 88 CHAPTER FIVE ..................................................................................................................... 89 DATA ANALYSIS OF HOUSEHOLD TAX BURDEN ....................................................... 89 5.1 Introduction .................................................................................................................... 89 5.2 Descriptive Characteristics of Sample ........................................................................... 89 5.3 Tax burdens in 2012/13 and 2016/17 periods ................................................................ 90 5.4.1 Determinants of Total Indirect Tax, VAT, and Import Tax Incidences ................. 93 5.4.2 Determinants of Fuel, Excise, and Communication Service Tax Incidences .... 101 5.4.2.1 Regression outputs of Fuel, Excise, and CST tax Incidences with Gender, Locality, and Employment status of households as predictors ......................................................... 102 5.4.3 Determinants of Food, Clothing, and Transport Tax Incidences ....................... 110 5.4.3.1 Regression outputs of Food, Clothing, and Transport tax Incidences with Gender, Locality, and Employment status of households as predictors .......................................... 111 5.4.3.2 Regression outputs of Food, Clothing, and Transport tax Incidences with Education, Gender dominance, household child status, and Size as predictors ................ 115 5.4.4 Determinants of Housing, Utility, and Furnishing Tax Incidences ................... 119 5.5 Summary .......................................................................................................................... 125 CHAPTER SIX ...................................................................................................................... 127 TAX INCIDENCE AND POVERTY .................................................................................... 127 6.2 Tax and Poverty Measures ........................................................................................... 127 University of Ghana http://ugspace.ug.edu.gh xv 6.2.1 Assessment of poverty incidence of households before and after total indirect tax 127 6.2.2 Household poverty incidence before and after total indirect tax by household characteristics ................................................................................................................. 129 6.2.3 The depth and severity of poverty in Ghana ...................................................... 133 6.3 Factors that influence poverty incidence/status in Ghana ............................................ 133 6.3.1 The relationship between different tax regimes and poverty incidence/status .. 134 6.3.2 The Relationship between household socio-demographic groupings and poverty incidence/status .............................................................................................................. 135 6.4 Chapter Summary ........................................................................................................ 155 CHAPTER SEVEN ............................................................................................................... 157 DATA ANALYSIS OF HOW HOUSEHOLD RESPONSE TO TAXES ............................ 157 7.1 Introduction .................................................................................................................. 157 7.2 Background of the sample location.............................................................................. 157 7.3 Socio-demographic Profile of Households .................................................................. 159 7.4 Knowledge/Awareness of Taxes.................................................................................. 163 7.4.1 Tax-related knowledge .......................................................................................... 164 7.4.2 Sources of tax related awareness .......................................................................... 167 7.4.3 Perceptions and frustration towards taxes............................................................. 169 7.5 Household Expenditure and Responses to Taxes ........................................................ 173 7.5.1 Household Consumption Patterns ......................................................................... 174 7.5.2 Perceived Effects of taxes on Household wellbeing ............................................. 179 7.5.3 Other Effects on Household Wellbeing ................................................................ 182 7.6 Coping Strategies ......................................................................................................... 186 7.7 Theoretical concept of poverty .................................................................................... 189 7.8 Chapter Summary ........................................................................................................ 194 CHAPTER EIGHT ................................................................................................................ 196 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS.......................................... 196 8.1 Introduction .................................................................................................................. 196 University of Ghana http://ugspace.ug.edu.gh xvi 8.2 Framing: Theoretical and Conceptual .......................................................................... 196 8.3 Summary of Findings ................................................................................................... 198 8.3.1. Tax incidence by household demographics ......................................................... 198 8.3.2 Tax incidence and poverty by household demographics ...................................... 198 8.3.3 Consumption tax incidence and poverty ............................................................... 199 8.3.4 Household Response to Tax Review .................................................................... 199 8.4 Conclusions: Conceptual and Policy Implications ...................................................... 200 8.4.1 Human Capital Development ................................................................................ 200 8.4.2 Enhancement of Social Protection Programme .................................................... 201 8.4.3 Improve Agriculture .............................................................................................. 202 8.4.4 Tax Policy Simulation Before Implementation .................................................... 202 8.5 Areas for further research ............................................................................................ 203 LIST OF REFERENCES ....................................................................................................... 204 APPENDIX 1: INTERVIEW GUIDE ................................................................................... 233 APPENDIX 2: COICOP ........................................................................................................ 236 APPENDIX 3: TAX SCHEDULES ...................................................................................... 240 APPENDIX 4: FUEL PRICE BUILD-UP ............................................................................. 242 PERIOD 2012/2013 ........................................................................................................... 242 2016/2017 .......................................................................................................................... 243 APPENDIX 5: ELECTRICITY AND WATER .................................................................... 244 Estimate of Electricity and Water Taxes ........................................................................... 244 APPENDIX 6: TAX INCIDENCE ........................................................................................ 245 APPENDIX 7: Ologit Estimates(dy/dx) ................................................................................ 253 APPENDIX 8: OLOGIT REGRESSION .............................................................................. 262 University of Ghana http://ugspace.ug.edu.gh xvii LIST OF FIGURES Figure 2. 1: Structure of Ghana Tax System............................................................................ 29 Figure 3. 1: Household consumption decision process ............................................................ 58 Figure 3. 2:Political causes of poverty ..................................................................................... 60 Figure 3. 3: Conceptual Framework ........................................................................................ 62 Figure 4. 1:Poverty Map of UWR............................................................................................ 84 Figure 4. 2: Analytic Process in CGT ...................................................................................... 87 Figure 5. 1:Changes in tax burden ........................................................................................... 91 Figure 5. 2:Total tax incidence by gender of household head and quintile ............................. 96 Figure 5. 3:Total Tax incidence by household child status and quintile ................................. 98 Figure 5. 4:Total tax, TVAT, and Import incidence by Region ............................................ 101 Figure 5. 5:Fuel and Excise burden by quintile ..................................................................... 106 Figure 5. 6:Fuel, Excise, and CST incidence by Region ....................................................... 109 Figure 5. 7:Tax burden by household consumption item ...................................................... 111 Figure 5. 8:Food burden by Gender and Quintile, 2012/13 and 2016/17 .............................. 119 Figure 5. 9:Clothing incidence by gender and quintile GLSS 6 and 7 .................................. 119 Figure 5. 10:Utility, Housing, and Furnishing incidence by quintile, 2016/17 ..................... 125 Figure 6. 1:Poverty Incidence 2013, 2017, and 2023 ............................................................ 128 Figure 6. 2: post-tax poverty incidence by VAT ................................................................... 145 Figure 7. 1:Housing structure in rural locality, UWR ........................................................... 159 Figure 7. 2: Housing structure in urban locality, UWR ......................................................... 159 Figure 7. 3: Theoretical construct of poverty in Upper West Region .................................... 193 University of Ghana http://ugspace.ug.edu.gh https://d.docs.live.net/27375953ade8ff0a/MyPhD_Documents/THESIS/Proph_Akoto_reviewed/Final/10329863_Final_Thesis_Rahman_Kurubuni.docx#_Toc153352865 https://d.docs.live.net/27375953ade8ff0a/MyPhD_Documents/THESIS/Proph_Akoto_reviewed/Final/10329863_Final_Thesis_Rahman_Kurubuni.docx#_Toc153353850 https://d.docs.live.net/27375953ade8ff0a/MyPhD_Documents/THESIS/Proph_Akoto_reviewed/Final/10329863_Final_Thesis_Rahman_Kurubuni.docx#_Toc153353851 https://d.docs.live.net/27375953ade8ff0a/MyPhD_Documents/THESIS/Proph_Akoto_reviewed/Final/10329863_Final_Thesis_Rahman_Kurubuni.docx#_Toc153353852 https://d.docs.live.net/27375953ade8ff0a/MyPhD_Documents/THESIS/Proph_Akoto_reviewed/Final/10329863_Final_Thesis_Rahman_Kurubuni.docx#_Toc153354197 https://d.docs.live.net/27375953ade8ff0a/MyPhD_Documents/THESIS/Proph_Akoto_reviewed/Final/10329863_Final_Thesis_Rahman_Kurubuni.docx#_Toc153356370 https://d.docs.live.net/27375953ade8ff0a/MyPhD_Documents/THESIS/Proph_Akoto_reviewed/Final/10329863_Final_Thesis_Rahman_Kurubuni.docx#_Toc153357012 xiii LIST OF TABLES Table 2. 1: Tax, Provisions, and some amendments ................................................................ 22 Table 4. 1: Sample structure of GLSS rounds ......................................................................... 68 Table 4. 2: Analytical Techniques in the Study ....................................................................... 69 Table 4. 3: dependent variables ............................................................................................... 75 Table 4. 4: Indepndent variables .............................................................................................. 76 Table 4. 5: Demographic variables .......................................................................................... 77 Table 4. 6: Sample Scheme ...................................................................................................... 85 Table 5. 1: Estimated beta regression results for Total tax, VAT, and Import tax incidence .. 95 Table 5. 2: Estimated beta regression result of Total tax, VAT, and Import incidence .......... 99 Table 5. 3: Estimated beta regression result of Total tax, VAT, and Import incidence ........ 100 Table 5. 4: Estimate of beta and fraction regression results of Fuel, Communication, and excise tax incidence ....................................................................................................... 104 Table 5. 5: Fuel, Communication, and Excise incidence by educational level of heads and quintiles .......................................................................................................................... 107 Table 5. 6: Fuel, Communication, and Excise tax incidence by Region ............................... 108 Table 5. 7: Food, Clothing, and Transport incidence by Gender, locality, and Employment114 Table 5. 8: Food, Clothing, and Transport by Gender of household head (percent) ............. 115 Table 5. 9: Food, Clothing, and Transport Incidence by Education and Quintiles................ 117 Table 5. 10: beta and fraction results of housing, utility, and furnishing incidence .............. 122 Table 5. 11: Housing, utility, and furnishing incidence by Education and quintiles ............. 124 Table 6. 1:Poverty incidence by household groupings (Percentage in parenthesis) ........... 132 Table 6. 2: Poverty Gap and Squared Poverty Gap, 2012/13 and 2016/17 ........................... 133 Table 6. 3: Marginal Effect of Taxes ..................................................................................... 135 Table 6. 4: Marginal Effects of VAT and Import .................................................................. 140 Table 6. 5: marginal effects of the poverty status model, with or without total VAT and import taxes by education, gender dominance, and household child status .................. 143 Table 6. 6: VAT and import incidence by Region ................................................................. 146 Table 6. 7: marginal effects of the poverty status model, with or without total food and excise taxes by gender, locality, and employment status.......................................................... 149 Table 6. 8: Food and Excise burden by Education, Gender dominance ................................ 152 Table 6. 9: results of food and excise tax incidence by the household region of residence .. 154 University of Ghana http://ugspace.ug.edu.gh xiv LIST OF ABBREVIATIONS ATAF Africa Tax Administration Forum AU Africa Union BDM Buyer Decision Models CB Consumer behaviour CD Customs Division CDD Centre for Democratic Development CEPS Customs Excise and Preventive Service CEQ Commitment to Equity CGE Computable General Equilibrium CIEA Composite Index of Economic Activity COICOP Cost of Individual Consumption by Purpose DMU Diminishing Marginal Utility DSSI Debt Service Suspension Initiative DTRD Domestic Tax Revenue Division EAC East African Countries ECOWAS Economic Community of West African States ERP Economic Recovery Programme FDI Foreign Direct Investment FGT Foster-Greer-Thorbecke FGP Fiscal Gains of the Poor FI Fiscal Impoverishment GDP Gross Domestic Product GLSS Ghana Living Standard Survey GPRS I Ghana Poverty Reduction Strategy GPRS II Growth and Poverty Reduction Strategy GPRTU Ghana Private Roads Transport Union GSGDA Ghana Shared Growth and Development Agenda HIPC Heavily Indebted Poor Countries Initiative ICUMS Integrated Customs Management System IFI International Financial Institutions IMF International Monetary Fund KPMG Klynveld Peat Marwick Goerdele University of Ghana http://ugspace.ug.edu.gh xv LDC Least Developed Countries LEAP Livelihood Empowerment Against Poverty MDG Millennium Development Goals MENA Middle East and North Africa MLSC Middle School Living Certificates MoF Ministry of Finance MPI Multidimensional Poverty Index NPA National Petroleum Authority NHIL National Health Insurance Levy OECD Organization for Economic Cooperation and Development OMC Oil Marketing Companies PPP Purchasing Power Parity RAGB Revenue Agencies Governing Board SAP Structural Adjustment Programme SDG Sustainable Development Goals SRM Stimulus-Response Model SSA Sub-Saharan Africa SSD Support Services Division SSSCE Senior Secondary School Certificate Examination TZ Tuo Zaafi UEMOA West African Economic Monetary Union UN United Nations UNDESA United Nations Department of Economic and Social Affairs UNDP United Nations Development Programme VAT Value Added Tax WB World Bank University of Ghana http://ugspace.ug.edu.gh 1 CHAPTER ONE INTRODUCTION 1.1 Background Poverty has been on the agenda of least-developed and Middle-Income Countries and welfare states for far too long, hence the need for a multifaceted approach to its reduction. Efforts to reduce poverty, reduce the gap between the rich and poor, and improve the wellbeing of households have received variable intervention policies from country governments. The policies have yielded different results across jurisdictions. As of 2017, the global poverty headcount at US$ 1.90 a day stood at 689 million people (Dieppe, 2021). The global extreme poverty rate experienced a one percentage point annual decline at US$ 1.90 a day (World Bank 2018a), resulting in a 5.7% decline in poverty between 2010-2015 (United Nations, 2020). The emergence of concepts such as "Africa Rising" and "African 21st century" shows Africa's turnaround in economic growth with considerable improvement in wellbeing. However, the speed of global poverty reduction is not ideal due to Africa’s role in global poverty distribution. About 47.8% (534million) of the global poor are currently in sub–Saharan Africa (United Nations Development Programme [UNDP] & Oxford Poverty and Human Development Initiative [OPHI], 2023), and a consistent increase in poverty incidence since 2018 (World Bank 2020d). Despite Africa’s 13 percentage point reduction in the extreme poverty rate between 1990-2015 (Beegle & Christiaensen, 2019), the World Bank estimates that 87% of the global extreme poor will be in Africa by 2030 (World Bank, 2018a). These estimates shift focus to the nature of poverty interventions in Africa. Poverty reduction strategies or interventions in Africa are country-specific and tailored to suit country requirements as poverty varies from country to country, region to region, and community to community. Whereas developed countries have successfully implemented University of Ghana http://ugspace.ug.edu.gh 2 interventions and reduced poverty significantly, many countries of the developing world, especially Africa, have had ineffective policies to reduce poverty. The poverty policies in Africa are usually adopted and modified policies developed by international institutions such as the World Bank (WB) and International Monetary Fund (IMF) coupled with policy directions from the United Nations (UN). Research has traced the effect of some policies on the trajectory of poverty reduction. The results of such studies have often remained mixed in the efficacy of poverty reduction policies. Structural Adjustment Programmes (SAPs) were a blueprint of WB and IMF on Economic growth. African countries implemented SAPs in the 1980s to deal with the economic crises of the 1970s (Heidhues & Obare, 2011). These policies had neo-classical or neoliberal characteristics, allowing African countries to deregulate their economies and allow the free- market economy to determine economic outcomes. SAPs consisted of 231 stabilization and structural adjustment policies based on conditionalities. (Hope, 1998). Often known as the "Washington Consensus" (Heidhues & Obare, 2011 p.58), the benefit of SAPs is debated in the literature. Of particular concern was the balance between tax increases and expenditure reduction to meet macroeconomic stability (Heidhues et al., 2004, as cited in Heidhues & Obar, 2011). Apart from Ghana and Uganda, countries that implemented the programmes did not experience significant economic growth; hence, the overall effect on poverty was minimal. For instance, per capita income declined by more than 20% between 1980 and 1997 (Noor, 2015). The failure of SAPs resulted in a policy shift towards Poverty Reduction Strategy Papers (PRSPs). PRSPs allowed countries to develop their poverty reduction strategy frameworks within a template governed by five principles, forming conditions for lending (Heidhues & Obare, 2011). However, the results were also minimal in poverty reduction, leading to financial deficits (Noor, 2015). University of Ghana http://ugspace.ug.edu.gh 3 A broader fight against poverty at the beginning of the millennium focused on cross-cutting issues such as hunger, gender, education, children, and disease. The United Nations Millennium Development Goals (MDGs), with a broad concept of poverty in 2000, became the guiding principles with targets and indicators. Countries developed their poverty reduction strategies within the MDG framework for 15 years. Globally, extreme poor significantly declined between 1999-2015 (915 million) compared to 175 million between 1990-1999, and the number of out-of-school children of primary age decreased by 43% (United Nations, 2015). In contrast, extreme poverty in developing countries declined by 33% between 1990-2015, and SSA experienced a 20 percentage point increase in net enrolment rate between 2000-2015 (United Nations, 2015). The SDGs were developed following the global success of the MDGs and changing global poverty dynamics after 2015. Using the MDGs as a baseline, members of the UN designed a 15-year development plan consisting of 17 goals envisaged to be achieved by 2030, which includes poverty (Morton et al., 2017). Some countries and institutions have cast doubt on the achievement of the SDG goals, particularly the goal of poverty. Finding the right mix of policies and required resources to achieve these goals remains a daunting task for countries in Africa. In Ghana, poverty and inequality have reduced due to significant progress in economic growth and its overall effect on the welfare of households via several welfare intervention strategies. In the aftermath of the COVID-19 pandemic, the African Development Bank (AfDB) in its Africa Economic Outlook report for 2023 projected Ghana’s growth rate to be 1.7% in 2023 and to recover at 3% in 2024 (AfDB, 2023). Historically, growth performance did result in some improvement in the welfare of households in Ghana, particularly after achieving the MDG goal one target. Despite the effort, a recent assessment of poverty using the various rounds of Ghana Living Standards Survey data (GLSS) in Ghana indicates that the annual University of Ghana http://ugspace.ug.edu.gh 4 poverty reduction percentage has consistently declined from 2% between 1991-1998 to 0.2% between 2012-2016. Similarly, poverty elasticity also declined from -1.18% to -0.07% in the same period (World Bank, 2020b). Interestingly, while the speed of poverty reduction slowed considerably (11% in 1998-2005 to 7.1% in 2005-2013) (Molini & Paci, 2015), the poverty gap, and poverty severity, including inequality, increased despite progress in economic growth after 2012 (World Bank, 2020b). Despite leadership challenges, poor design, and implementation of poverty reduction policies (Ajulor, 2018), finding adequate financing policies and resources remains a critical challenge among regions, especially in Africa. International Public Finance Institutions (IPFIs) are the primary source of funding. However, the debate over the impact of IPFI funding on growth with its interlinkages to poverty reduction remains mixed (Doucouliagos & Paldam, 2013; Galiani et al., 2014; Brückner, 2013). The reliance on official development assistance has also resulted in rising external debt. For instance, debt in Africa has increased significantly, raising the issue of debt sustainability. Africa's external debt grew 10.2% in 2011-2013 compared to 7.8% in 2006-2009 and is currently on the surge (Atta-Mensah & Ibrahim, 2020). From 2019 to 2020, Africa's financial debt increased from 4.9% to 10.7% (United Nations Department of Economic and Social Affairs (UNDESA), 2021)The changing nature of the international equity and borrowing market and some African countries' ascension into middle-income status imply that countries look inward for domestic resource mobilization to finance development policies. Taxation remains a significant source for harnessing domestic revenues for government expenditures. Tax is a compulsory levy on citizens by a state (Amidu, 2019), either in direct or indirect forms. The taxes include Value-Added Tax (VAT), excise duties, direct taxes (income and corporate taxes), and energy-related taxes. Since colonial times, Africa's tax regimes have transformed tremendously in line with the Global tax development trajectory. Tax reforms in University of Ghana http://ugspace.ug.edu.gh 5 Africa are influenced by recommendations from international institutions such as the WB and IMF, usually through adjustment programmes and focus on central government taxation (Fjeldstad & Rakner, 2003). These reforms are not different from tax reforms of the industrialized nations but are usually country-specific reforms based on prescription or conditions of financial assistance. Reforms and reviews include widening tax brackets or broadening the tax base, efficient tax administration, reviewing tax rates or tariffs, abolishing export duties, and simplifying tasks (Tiftik & Mahmood, 2021). Despite all the tax reforms, the tax-to-GDP ratios of African countries lag global and other sub- regional averages, an implication of inefficient tax regimes and reviews. Africa's tax-to-GDP ratio of 16% is below the average of Organization for Economic Cooperation and Development (OECD) countries (34.1%) and Latin America and the Caribbean (LAC) tax-to-GDP ratio of 21.7% in 2021 (OECD/AUC/ATAF, 2022). About half of the countries in Africa's tax-to-GDP were below 15%, which is not enough to meet essential services (Megersa, 2021). The outbreak of the COVID-19 pandemic worsened domestic revenue mobilization efforts globally due to restrictions on mobility affecting trade and livelihoods. Ghana’s tax revenue performance has improved over the years, owing to the numerous developments in tax administration (MoF, 2022). Ghana's tax system predates 1943, when the British colonial government introduced the first income tax policy under ordinance number twenty-seven (27) after the failure of the Poll Tax Ordinance of April 1852 (Adukonu & Ofori- Abebrese, 2016). Osei & Quartey (2005) have elaborated on the historical development in Ghana's tax systems by classifying actions into a period of tax base restoration, production incentives, and efficiency enhancement. Some reforms were established based on development assistance conditions or prescriptions, resulting in different economic effects. For instance, the introduction of the Integrated Customs Management Systems (ICUMS) boosted tax revenues (MoF, 2022). The COVID-19 pandemic reversed some of the gains made as lockdowns University of Ghana http://ugspace.ug.edu.gh 6 resulted in the closure of shops, loss of labour, and reduction in domestic revenues, forcing GRA to introduce digital measures for revenue mobilisation (MoF, 2022). Ghana's tax system consists of direct, indirect, and trade taxes and remains a significant source of revenue for financing development. Despite the effect of COVID-19, taxation remains the central revenue mobilization mechanism for developing and middle-income countries including Ghana, given the fact that exports are usually primary products in nature and are subject to international commodity price fluctuations, currency depreciation, and rising interest rates (Coulibaly et al. 2019). Taxes have different behaviours in an economy. The introduction of taxes is to ensure the needed revenues to improve wellbeing by producing social development goods. Alternatively, taxes reduce households’ consumption by influencing the price and disposable incomes all things being constant (Idris & Abdulwasiu, 2023). While developing countries and middle-income countries such as Ghana are making a significant effort to become financially independent, focusing on domestic revenue or resource mobilization has lost sight of the tax effect on poverty during tax reforms and reviews (OECD, 2018). Fiscal policy and revenue mobilization have gained momentum with specific emphasis on tax collection, and the trade-offs between efficiency and equity, hence studying the impact of a given tax policy on household welfare is not given much attention (Addison et al., 2018). However, the linkages between changes in tax reforms and with resultant changes in household wellbeing in the quest for development without foreign aid have not been a subject of much discussion in the academic literature. Also, citizen responses to tax burdens and reviews have been scarce in the literature, hence turning attention to research in the sector laudable. University of Ghana http://ugspace.ug.edu.gh 7 1.2 Problem Statement A significant concern is a need for revenues to finance social protection and other social development programmes. Funding sources for development include government or domestic revenues, concessional support, and non-concessional loans, usually from International Financial Institutions (IFIs) and Foreign Direct Investment (FDI), raising interest into debt- GDP discussions (Quartey, 2017). External debt remains high on the debt structure and piles up colossal interest, raising concerns over debt sustainability. As of June 2022, the public debt to GDP ratio for Ghana was 78.3% (Adu et al., 2023). Turning attention to other sources of development assistance, the president in March 2017 called for a Ghana Beyond Aid agenda, signifying the need for domestic resource mobilization in financing development. Harnessing domestic revenues from taxes becomes a significant avenue for growth that is not dependent on foreign aid, thus consistent tax reviews, monitoring, and administration becomes a key activity in government business. To help recover from contractions due to the COVID-19 pandemic, the government of Ghana, in the 2021 budget, reviewed a couple of taxes and introduced new ones. There was one percentage point increase in VAT flat rate and National Health Insurance Levy (NHIL) making 4% and 3.5% respectively, an energy sector recovery levy of 20 pesewas per liter of petrol/diesel, a pollution levy of 20 pesewas per liter on petrol/diesel and a financial sector clean-up levy of 5% on profit before tax of banks among other tax reliefs and exemptions (KPMG, 2021). In 2023, the VAT rate was increased to 15% with a review of some excise taxes. While mobilizing revenue and ensuring a Ghana beyond aid plan is critical to development, the influence of tax reviews on Ghana's households' welfare is under-researched. The study finds out how the tax burden changes poverty trends in Ghana. This study fills literature, theoretical, and methodological gaps in Ghana's tax and poverty nexus. University of Ghana http://ugspace.ug.edu.gh 8 First, while the literature on poverty and inequality abounds (Fosu, 2008, 2009, 2010, 2015, 2018; Iniguez-Montiel & Kurosaki, 2018), not much is related to the anti-poverty features of taxes. Gemmell & Morrissey (2005) and van de Walle and Nead (1995) posit that the impact of taxation on poor people in third-world countries has become a secondary issue, partly because taxes paid are insufficient to finance social expenditure to support people experiencing poverty. According to Auerbach (1996), as cited in Adukonu and Ofori-Abebrese (2016), the limited literature contains varied conclusions as developing countries' tax policies often emanate from a political and private interest. Mabugu et al. (2015) found that consumptive taxes (indirect taxes) combined with progressive subsidies on some goods reduce poverty. Quartey et al. (2007) also concluded that removing import and export taxes can alleviate Ghana's poverty incidence, depth, and severity. In Ghana, for instance, few studies have focused on fiscal incidence and poverty relationships. These are Younger (1996), Colatei and Round (2000), Aryeetey et al. (2010), and Younger et al. (2017). Younger (1996), focused on the incidence of indirect taxes in Ghana using round one (1988/9) of GLSS survey data and found direct taxes and petroleum taxes to be progressive with no link to poverty. Colatei and Round (2000) examined the cost of eliminating poverty and financing and found that financing poverty with direct taxes is more effective than import taxes. Aryeetey et al. (2010) assessed the gender dimensions of indirect taxes in Ghana using round 5 (2005/2006) of the GLSS data. They found that about 7.3% of household expenditures are indirect taxes, and the incidence of VAT is higher than that of excise duties and fuel taxes. Younger et al. (2017) used the round 6 (2012/2013) of the GLSS data, including tax and public expenditures data for the fiscal year 2013, and adopted the Commitment to Equity (CEQ) method to simulate taxation, social spending and indirect subsidies on poverty and inequality in Ghana. The study found that apart from public expenditure on education and health, the University of Ghana http://ugspace.ug.edu.gh 9 effect of public spending on poverty is not encouraging. The results also show that financing poverty through cash transfers such as LEAP via increased VAT does not affect poverty. The GLSS data from which poverty is estimated do not have detailed data on LEAP beneficiaries. The findings also do not segregate the analysis of indirect taxes into LEAP and non-LEAP beneficiaries to determine the extent of the impact of cash transfers on poverty. Theoretically, studies on the fiscal incidence and poverty in Ghana often employ CEQ assessments. The methods do not follow a particular theory but are based on measurement models. The models have different measurement techniques, indicators, and assumptions, hence producing different results. Quantitative methods dominate the poverty-tax literature using general equilibrium models and regression analysis. Kim (2000) used microdata with decomposition analysis to calculate the poverty reduction efficiency of welfare states. Understanding taxes and poverty from poor people is scarce in the literature, hence the need to include a qualitative dimension to tax-poverty research. The income approach with cash transfers and pensions is found in poverty and tax relationship research, especially CEQ assessments as found in Younger et al. (2017). Including subsidies, gratuities, and cash transfers in CEQ assessments affects results as some beneficiaries may understate incomes to obtain benefits (World Bank, 2005). Also, in developing countries, pension receivers are usually in the formal sector. Most of the population is in the informal economy; hence, including pension incomes and cash transfers to consumption expenditure does not provide a reliable tax-to-poverty analysis. Adukonu and Ofori-Abebrese (2016) attempted to measure the impact of various taxes, such as import and export taxes, including remittances and property income, on Ghana's poverty. The study found that an increase in indirect taxes worsened poverty levels in Ghana. However, the study did not show the spread of poverty. University of Ghana http://ugspace.ug.edu.gh 10 The current study uses the mixed method approach to allow for the fusion of quantitative and qualitative elements in explaining the tax burden and its effect on household welfare in Ghana. It further describes how households respond to tax reviews in Ghana, a move from a positivist to a pragmatist research paradigm. The qualitative aspect of the tax burden literature is a part that is scarcely researched in Ghana. 1.2.1 Main Research Question How do tax reviews influence household welfare in Ghana? How do households behave toward tax reviews? 1.2.1.1 Specific Research Questions 1. How does the indirect tax burden vary among households in Ghana? 2. Under what tax scenarios will household poverty status be affected? 3. How do households respond to tax reviews? 1.2.2 Research Objectives 1.2.2.1 Main Objective The main objective of the study is to examine how indirect tax influences household poverty in Ghana. The study specifically, seeks: 1.2.2.2 The Specific objectives of the study are; 1. To examine the socioeconomic variations in indirect tax incidence among households in Ghana in 2012/2013 and 2016/2017. 2. To determine the effects of various indirect tax policies between 2012 and 2023 on households’ poverty status. 3. To explore household awareness and consumption responses to tax reviews. University of Ghana http://ugspace.ug.edu.gh 11 1.3 Significance of the study Taxation is a major source of domestic resource mobilization for developing countries as conditions for borrowing have become a considerable constraint. It also remains a significant resource for countries that seek to develop without foreign assistance or debts. Tax reforms or reviews have been a regular practice in raising needed resources and controlling economic behaviour. While processes of tax review are not often made known, it is difficult to understand the level of analysis and resultant implications of any tax on the citizenry. Apart from adding to the literature on taxes and poverty in Ghana, and serving as a reference point in academia, this study adds to methodology on fiscal policy. While few tax incidence studies are conducted using Ghanan as a case study, they have often used a single cross-sectional data and do not assess the effect of tax policies on household welfare. The few studies that attempted to analyse the effect of tax policies on poverty do not assess tax effect on poverty by household socioeconomic variables, an area in the study that fills a literature gap. The use of repeated cross-sectional data allows for the study of variations in tax incidence with its resultant effect on poverty incidence. The study methodology can be replicated in simulating future tax policies or reviews on household welfare, to assess the likely implications on households’ welfare and tax burden distribution before administration. Again, the inclusion of a qualitative dimension to the study adds literature regarding the quality of lives of people in poverty, particularly how they manoeuvre household consumption expenditures amid unstable indirect tax regimes. 1.4 Organization of the Study The study is organized in eight (8) chapters. Chapter One has the introduction. It contains the background of the study, covering a broad conceptualization of poverty, nature, and poverty rates, poverty reduction strategies in Ghana, University of Ghana http://ugspace.ug.edu.gh 12 and domestic resource mobilization for development in the wake of declining international assistance and high borrowing costs. It also has the problem statement, research questions, objectives of the Study, justification/relevance of the Study, and organization of the study. Chapter Two deals with the review of the relevant literature concerning the study. This chapter reviews the concept of poverty to capture the multidimensional nature of poverty. It also captures the trajectory of Ghana's fight against poverty and fiscal policy in Ghana. The chapter further includes tax reforms in Ghana and contains empirical literature on Ghana's poverty, fiscal policy, and tax reforms. Chapter Three explains theories that put the study into perspective. Theories of poverty, consumer behaviour, and tax are in this chapter. It discusses the political theories of poverty, Fiscal incidence Theory, and Theory of Taxation. It also has a conceptual flow diagram linking the ideas to aid in comprehending the relationship between tax burden, household behaviour, and poverty. Chapter Four consists of the methods and procedures followed in the conduct of the study. This chapter provides the research paradigm, the research design, the sampling techniques, the methods and sources of data collection, data handling procedures, and the ethics followed in the research. The chapter also has the definition of terms and variables as applied in the study. Chapter Five presents the household distribution of tax incidence in Ghana by first estimating the variations in tax incidence between the episodes of the data used and for all the taxes used in the study. It also delves into the gender variations in tax incidence and the incidence by localities. Chapter Six Chapter six also provides the effect of tax reviews on the poverty status of households. It includes results by gender, and localities, and cuts across poverty headcount, poverty gap, and squared poverty gap. The chapter also contains a simulation of the 2023 tax amendments, specifically VAT and excise taxes, and their implications on household poverty University of Ghana http://ugspace.ug.edu.gh 13 status by household socio-demographic variables. Simulations are on the tax reviews between the two data periods and the 2023 VAT and excise tax amendments. Chapter Seven highlights the results of the qualitative part of the study. It answers the tax knowledge and awareness level of households. It also discusses findings on how households in the poorest region of Ghana amend their consumption patterns in line with the changing tax environments which often present different tax burdens to households, including their perception towards payment of taxes. Chapter Eight provides the entire study's summary, conclusions, and some policy recommendations. University of Ghana http://ugspace.ug.edu.gh 14 CHAPTER TWO TAX AND POVERTY REDUCTION 2.1 Introduction The analysis of poverty remains multifaceted in literature as the cause of poverty can be traced to many underlying variables. As a multidimensional phenomenon, it is relevant that the poverty discussion is within general contemporary social and household demographic conditions. A heightened concern is the implication of tax reforms and reviews on the welfare of taxpayers, primarily as Ghana aims to achieve sustained economic development “beyond aid.” The chapter constitutes theoretical and empirical literature. The literature provides discussions on the concept of poverty and its measurements. It further discusses the poverty trends in Ghana, poverty interventions in the period of Economic Recovery programmes, and some tax reviews or reforms in Ghana. The final section provides empirical discussions on the relationship between poverty and taxation, focusing on Ghana's indirect tax burdens and household welfare. The household features that mirror tax burdens are also part of the literature. 2.2 Measurement of Poverty The heterogeneous nature of poverty has resulted in many approaches to poverty analysis. Consequently, there are many definitions of poverty in the literature. Poverty approaches include human rights, human resources, basic needs, social exclusion, capability, participatory, and utilitarian approaches (El Azami, 2021; Laderchi et al., 2003). The attempt to generalize poverty globally, coupled with the normative concepts offered by the different approaches to poverty, has resulted in variances in poverty headcount and severity ( El Azami, 2021). The various methods have also given rise to many definitions, providing avenues and a basis for selecting indicators. For instance, the basic needs approach to poverty can be linked to S. B. Rowntree in 1901 (Pomati & Nandy, 2020) and supported by the World Bank in the early 90s. The measurement University of Ghana http://ugspace.ug.edu.gh 15 describes poverty as the inability to satisfy a minimum standard of living measured in monetary terms (World Bank, 1990). It measures poverty in terms of the nutritional threshold selected to meet healthy human life with some adjustment to expenditures that are non-food in nature (World Bank 2005). Poverty subjectively evolved due to the inadequacy of the basic needs approach in developed nations, as living below the generally accepted minimum standard seldom occurs in such countries (El Azami, 2021). On the other hand, Amartya Sen (1987) introduced the capability lens to poverty, which encompasses quantitative and qualitative indicators such as income, rights, self-confidence, education, health, etc. Therefore, in obtaining a consensus over the definition of poverty, it is prudent to combine the concepts of wellbeing and capability. Poverty, therefore, exists when an individual is incapable of achieving wellbeing. However, the distinction between functioning, capability, and possession of a good makes the capability and wellbeing approach to measuring poverty daunting. For instance, Amartya Sen argued that a variation between starvation and fasting should be part of calculating the nutritional conditions of persons since some persons may starve based on religious principles while others may not have the capability to provide adequate nutrition (Basu & Lopez-Calva, 2011; Sen, 1987). It thus suggests that indicators for poverty should depend on the conceptual approach and be accurate and subjective to the conditions of the target study group. The wellbeing approach to measuring poverty, espoused by Cammack (2004), remains a broad concept from which many definitions emanate. Poverty from the wellbeing approach is the command over a particular resource determined by financial ability and based on the cut-off below which an individual is considered poor. Stiglitz et al. (2010, p14) argued that measuring wellbeing should simultaneously consider material factors such as income, consumption and wealth, political voice and governance, education, social capital, security, and health status. University of Ghana http://ugspace.ug.edu.gh 16 The United Nations Development Programme (UNDP) took a human development approach and shared that poverty includes denying opportunities and choices, which could lead to low human development regarding self-esteem, dignity, and freedom (Hill & Adrangi, 1999). Due to variations in the concept of poverty, various poverty lines and poverty statistics vary. In the literature, the monetary poverty line and Multidimensional Poverty Index (MPI) are bases for significant discussions in the national and global poverty context (Haughton & Khander, 2010; UNDP & OPHI, 2020). The monetary measure of poverty likens poverty to a lack of money measured in the form of low income or expenditure, particularly because of the ease of measurement and comprehension (World Bank, 2005). The inability of the quantitative measures of poverty to capture the lived experiences and the quality of lives of people experiencing poverty occasioned the multidimensional approach to poverty, further reflecting complexities in the concept. It measures the decline of factors that affect the living standards of households or individuals based on a poverty line (Vizuete- Salazar et al., 2019). The global Multidimensional Poverty Index (MPI) consists of 10 indicators in three proportionally weighted broad dimensions. The dimensions cut across health, education, and standard of living (UNDP & OPHI, 2020). An individual or household is poor when deprivation exists in one-third or more of the indications, based on the mean number of weighted deprivations experienced by the home. Due to the numerous dimensions within each indicator, the weight for health indicator (nutrition and child mortality) is 1/6, education (school years and attendance) 1/6, and standard of living (cooking fuel, sanitation king water, electricity, housing, and Assets) is 1/18 (UNDP & OPHI, 2020). With values between 0-1, higher values indicate high poverty incidence and intensity. Even though it complements the unidimensional poverty measures by revealing the extent of the poverty situation, it still does not provide a detailed qualitative description of the poor and how they University of Ghana http://ugspace.ug.edu.gh 17 respond to poor conditions. The weakness of MPI is in the index and method of categorizing deprived dimensions. For instance, data such as powerlessness, shame, and rights are not usually available. While calculating welfare employs quantitative measures, the qualitative conditions that characterize people experiencing poverty are often missing in studies. As a result, literature on how the poor navigate living conditions in response to poverty is scarce. Measuring poverty requires using price data, poverty lines, consumption data, and other wellbeing indicators. In addition, measurement involves systematic steps such as the selection of welfare indicator[s], the establishment of a minimum standard for the welfare indicator[s] below which an individual is considered poor, and calculating the statistics to describe the poverty measure (World Bank, 2005). 2.3 Global Poverty Trends The literature reiterates the challenges of providing a global poverty profile as household surveys differ. Population weight variations across country surveys constitute a significant challenge (Castañeda et al., 2016). Current global poverty statistics often consider the COVID- 19 implications on global Poverty (Tateno & Zoundi, 2021). Valensisi (2020), uses a sample of 164 countries, and the Neutral Distribution Growth (NDG) approach and found that globally 68 million people were poorer in 2020 at $1.90/day. The United Nations Conference on Trade and Development [UNCTAD] (2020) sampled 47 Least Developed Countries (LDCs), used the NDG approach, and found that 32 million people were poor in 2020 among the countries surveyed. Lakner et al. (2022) further used a household survey of 166 countries with growth projections to assess the impact of COVID-19 on poverty. The study found COVID-19-induced poverty incidence between 119 million to 124 million people in 2020. The further use of University of Ghana http://ugspace.ug.edu.gh 18 machine learning algorithms with the same sample size expected poverty to have risen to 163 million people by the end of 2021. The UN also employed the world economic forecasting model with data from 176 countries and expected 131 million to be poor by the end of 2020 (UN, 2021). Due to the scarring and severe adverse effects of COVID-19 on the global economy, Kharas and Dooley (2021) estimate extreme global poverty to reach 588 million people by 2030. Geographically, 64% of the global poor are in sub-Saharan Africa, while 21% live in Asia. Africa could host about 64% or more of the global poor by 2030 due to fragile and conflict-prone country economies (Kharas & Dooley, 2021). Poverty reduction in Africa is slower than population growth, with a poverty incidence of about 40%; hence, Africa slows global poverty reduction (Ferreira et al., 2022; Beegle & Christiaensen, 2019). Further, the AfDB (2023), in the revised COVID-19-infused Africa Economic Outlook Report 2021, shared that inequality will increase the probability of 34.4% of the African population going into poverty in 2021 and the cost of bridging the poverty gap is estimated to be US$4.5 billion. 2.4 Poverty in Ghana Ghana is no exception to COVID-19 effects; hence, the recent poverty outlook considers the pandemic effect. The COVID-19 pandemic affected the economy and impacted the speed of poverty reduction. Sasu (2024) used a neutral distribution model and an assumed pass-through of 0.7 based on GDP per capita and GLSS 7 data, Ghana’s extreme poverty rate at US$1.90/day was 11.1% in 2019, 11.2% in 2020, and 11.3% by 2021. The rural areas continue to be extremely poor (3.3 million) compared to the urban areas (278,000). Poverty at the lower- middle-income level (US$3.20/day) was 26.8%, while upper-middle-income Poverty at US$5.50/day was 51.7%. University of Ghana http://ugspace.ug.edu.gh 19 In support, Bukari et al. (2021) used a sample of 3005 households from the ten regions in Ghana to assess the impact of the COVID-19 pandemic on household living standards and poverty. Results from using an empirical model and indicators from the Afro barometer survey by the Centre for Democratic Development (CDD) showed that the COVID-19 pandemic heterogeneously affected poverty and the living standards of households. Gender-wise, poverty increased for female-headed homes by 6.3%, with a declined standard of living by 5.4%. Also, adding a person to a household increases the poverty rate by 2.3% and decreases living standards by 1.1% (Bukari et al., 2021). The findings suggest that the COVID-19 pandemic worsened the welfare of households. The result further depicts the gender disparities in poverty: female-headed families are poorer than male-headed households. The historical success of Ghana’s fight against poverty and its relationship with the Structural Adjustment Programmes (SAPs) is varied and multifaceted. Some poverty interventions fall under the Growth and Poverty Reduction Strategies (GPRS I & II) and the Economic Recovery Programme (ERP) (the 1980s – 1990s). While some of the policies were effective, others had adverse effects on the welfare of the masses. For instance, Poverty in Ghana became worse ten years after implementing SAPs, regardless of the remarkable growth attributed to SAPs (Odutayo, 2015). Poverty rates despite numerous poverty interventions show many variations in terms of regional poverty distributions in Ghana. The regions of the north, particularly Upper West, Upper East, and Northern including the Volta regions hosted a high number of the extremely poor and poor with a rural poverty rate (39.5%) being five times higher than urban poverty (7.8%) (GSS 2019). The adoption and implementation of the various welfare intervention programmes are often associated with some fiscal and monetary measures, reflecting the objectives of the proposed institution. Key among them relates to resource mobilization, debt sustainability, and control of public expenditure (Odutayo, 2015). Taxation remains a crucial source of domestic resource University of Ghana http://ugspace.ug.edu.gh 20 mobilization, particularly in many African economies that require substantial revenue for socio-economic development. The following section reviews the literature on Ghana’s tax system. 2.5 Taxation in Ghana 2.5.1 Fiscal Revenue Projections The recent nature of Ghana's economy has ignited much interest and concern in research and policy on debt sustainability, revenue mobilization, and appropriation (Klynveld Peat Marwick Goerdele [KPMG], 2021; Ministry of Finance [MoF], 2021; OECD/AUC/ATAF, 2020). In the 2024 budget statement presented to parliament, total revenue and grants amounted to GHC79.1 billion (a negative deviation of 2.8%), representing the first 8 months of the year 2023 (MoF, 2023). In 2022, Ghana’s Annual tax performance report show an exceeded revised target revenue by 5% (MoF, 2022). Budget statements presented to parliament often involve the introduction of tax reviews and reforms to achieve development objectives. Domestic taxes (direct and indirect) customs import duties and import VAT account for a substantial part of government revenues. Even though Tax revenue mobilization increased from 2000 to 2019, Ghana’s goal of achieving a tax-GDP balance of 18-20% by 2027 remains a mirage, as the revenues often fall short of targets, except for revised revenue targets. Recently, there has been growing attention to widening the tax bracket to include the vast informal sector. As a result, the GoG in the 2024 Budget expects total tax revenue and grants of GHC176.4 billion, out of which 77% is to be accounted for through taxes GDP growth of 2.8%, and a fiscal deficit of 7.7% by the end of 2023 (MoF, 2023). To improve domestic resource mobilization, tax reviews (institutional and non-institutional) have remained a constant component of budget presentations and political party promises. Administrative tax reforms existed even before the income tax ordinance of University of Ghana http://ugspace.ug.edu.gh 21 1943. Amidu (2019) shared that significant tax reforms took place in 1852, 1854, 1943, 1966, and the millennium with many amendments. Ghana’s tax reforms have witnessed significant reorganizations since the early 1980s. The first was to broaden the tax base between 1983-84, after which incentives were provided to boost production (1985-86). Then, the reform between 1986-2000 focused on efficiency and equity (Bekoe et al., 2016; Osei & Quartey, 2005). Finally, post-2000 witnessed the modern transformation of tax administration. Each reform period resulted in a different effect on the tax revenue and received various responses from taxpayers. Currently, Ghana operates a single revenue authority model of tax administration. Ghana Revenue Authority Act, 2009 (Act 791) established the Ghana Revenue Authority (GRA) by amalgamating the erstwhile Internal Revenue Service (IRS), VAT service, and Customs Excise and Preventive Service (CEPS), and the Revenue Agencies Governing Board (RAGB). A commissioner-general is the head of the authority. A commissioner each heads the Customs (CD) and Domestic Tax Revenue Division (DTRD), respectively. In addition, a Support Services Division (SSD) provides finance, legal, human resources, and policy and program services for the authority (GRA, 2021). Since its inception, GRA has witnessed several structural changes, cutting across Information Communication and Technology (ICT) and human resource development. Taxes in Ghana are by the legal provisions provided by Article 174 of the 1992 constitution of Ghana. Table 2.1 details some tax provisions giving rise to several taxes and levies in Ghana. University of Ghana http://ugspace.ug.edu.gh 22 Table 2. 1: Tax, Provisions, and some amendments TAX TYPE LEGAL PROVISION/QCTS Income Tax Capital Gains Tax Gift Tax Corporation Tax E-commerce Income Tax Act, 2015 (Act 896) Income Tax (Amendment) Act 2021 Internal Revenue Service Act 2000 (Act 592) and Internal Revenue Regulations, 2001 (L.I. 1675) Financial Sector Recovery Levy Act 2021 Income Tax (Amendment) Act, 2019, Act 1007 Trade Taxes – import duty, special import levy, African Union Levy, ECOWAS levy, Export and Import levy (EXIM), Excise tax stump, Environmental Tax, Customs Act, 2015 – Act 891 Stamp Duty Act 689 Special Import Levy (Amendment) Act, 2019, Act 1004 VAT Value Added Tax Act, 2013 - ACT 870 Value Added Tax (Amendment) Act, 2019, Act 1005 National Health Insurance Levy (NHIL) NHIL (ACT 971) GETFund Levy Ghana Education Trust Fund Act, 2000 - Act 581 Communication Service Tax (CST) Communications Service Tax Act, 2008 -Act 754 Covid-19 Levy Covid 19 Health Levy Act National Fiscal Stabilization Levy National Fiscal Stabilization Levy Act, 2009 (875) National Fiscal Stabilisation Levy Act 2013 Act 862 National Fiscal Stabilisation Levy (Amendment) Act, 2019, Act 1011 Special Petroleum taxes Pollution and sanitation ESLA Act 2015, Act 899 Energy Sector Levy (Amendment) Act, 2021 (Act 1064) Debt Recovery Fund Act, 2003 (Act 642) Electricity Act 1995 (Act 497) National Petroleum Authority Regulations, 2012 (L.I. 2186) Airport Tax Airport Tax (Amendment) Law, 1985 (PNDCL 128) The Airport Tax (Amendment) Act, 2001 (Act 596) The Airport Tax (Amendment) Act, 2003 (Act 638) Source: Ghana Revenue Authority, Price Waterhouse Coopers (2021) There have been several amendments to tax tariffs in Ghana to improve revenue administration efficiently and effectively. Tax amendments are usually part of budget presentations, even though some occur when needed. For example, the 2021 budget statement presented to parliament witnessed the introduction of the COVID-19 recovery levy, the Pollution and Sanitation levy, and some amendments to the Energy Sector Recovery Levy. Similarly, the University of Ghana http://ugspace.ug.edu.gh 23 2022 budget scrapped the road tolls and introduced the electronic transactions levy. Figure 2.1 shows the current tax structure with the rates classified into direct and indirect taxes. The taxes in the figure are selected taxes. Even though the figure contains some direct taxes, emphasis is placed on indirect taxes covered in the study. There is much focus on selected indirect taxes. Indirect taxes covered in the study include the standard VAT rate, Petroleum taxes, Excise taxes, and import taxes. University of Ghana http://ugspace.ug.edu.gh 29 Source: Author Adopted from Energy Sector Levies Act 2015 (Act 899), Energy Sector Levies (Amendment) Act 2017 (Act 946), Energy Sector Levies (Amendment) Act 2019 (Act 997), and Energy Sec Levy (Amendment) Act 2021 (Act 1064), Ministry of Finance and Institute of Fiscal Studies (2021) • CST (5%) Tax structure in Ghana Direct Taxes Indirect Taxes • Income Tax (Schedule based) • Corporate Tax 25% general, 35% mines • Financial Sector Recovery Levey (5% Profit before Tax of banks -to 2024) •VAT Flat Rate (4%) •Standard Rate (15%) • NHIL (2.5%) •GETFund (2.5%) • Energy Sector rates/levies • Energy Debt Recovery Levy (Ghp49/ltr [petrol/diesel, 3Ghp on Marine Gas oil, 4Ghp TOR debt, 41Ghp/kg LPG] Price Stabilization and Road fund levy (16Ghp/ltr petrol, 14Ghp/ltr diesel, 14Ghp/kg LPG]) Public Lighting Levy (3%/kWh of electricity on all consumers) National Electrification Scheme (2%/kWh of elec. on all consumers) Pollution and Sanitation Levy (10 GHP/ltr on petrol/diesel) Energy Fund Levy (1GHP [petrol, diesel, kerosene, fuel oil] Road Fund Levy (48Ghp/ltr [petrol/diesel] Energy Sector Recovery Levy (Ghp20 on petrol, diesel, Ghp18/kg LPG) Special Petroleum Tax (46Ghp on petrol/diesel, 39 Ghp kerosine/ 48Ghp/kg LPG • AU Levy (0.2%) • Special Import Levy •EXIM levy (0.5%) • Export Duty (0%) • Admin charges (0.4%-3.45%) • Excise Duty (0-175% Ex. Fac. Price •Electronic Transaction levy 1.75% • COVID (1%) Figure 2. 1: Structure of Ghana Tax system University of Ghana http://ugspace.ug.edu.gh 30 There are more indirect trade-related taxes in Ghana, and tax reviews often have implications for the living conditions of households. The availability of more consumption-based taxes has tremendous consequences for poverty. More attention is attached to the revenue implications for economic growth and infrastructural development. Tax reviews have become rampant and unstable, making business planning quite arduous. Debates on Ghana’s tax regime reviews since independence often lack clear implications on the welfare of the masses or the vulnerable. The following section reviews the empirical literature on the impact of taxes on welfare by first exposing the relationship between taxes, economic growth, and poverty. 2.6 Empirical Literature Review 2.6.1 Tax, Economic Growth, and Poverty The link between taxes and economic growth often depends on the tax mix in an economy. In this regard, different taxes produce various effects on an economy. For example, Ljungqvist and Smolyansky (2016) used firm-level data between 1970–2010 to examine the link between corporate taxes and growth. The study found that increasing corporate taxes hurt employment and income without significantly affecting economic growth. Further, Mdanat et al. (2018) used the error correction model and found that income tax, corporate tax, and personal tax negatively influence Jordan's growth. Conclusions are like findings in South Africa on income tax effects (Dladla & Khobai, 2018). Similarly, Rahul (2015) found a positive relationship between direct tax revenue and economic growth in India. The findings are in line with Gashi et al. (2018), Ogundana et al. (2017), and Macek (2014) various studies share that direct taxes have a positive influence on economic growth. On the other hand, Ahmad et al. (2018), in a study between 1974 and 2010, found that indirect taxes adversely affect economic growth in Pakistan. University of Ghana http://ugspace.ug.edu.gh 31 In India, Neog and Gaur (2020) followed the works of Arnold et al. (2011) and Acosta-Ormaechea and Yoo (2012) by examining the tax structure-growth relationship. The study used different property, commodity, service, and income tax models. The findings show that property tax has a positive relationship with growth and is a substantial indicator in the long and short run. In contrast, commodity and service taxes negatively affect per-capita growth. The result thus has implications for tax regime design in developing countries. However, the study did not single out the indirect taxes to examine their effect on economic growth to help determine an optimal tax mix for the long and short-run growth of economies and poverty reduction. Research showed a positive and significant relationship between indirect taxes and economic growth in Nigeria (Chigbu, 2012; Ogbonna, 2012; Confidence, 2014). In Cote d’Ivoire, Keho (2010) used Scully regression models and found that higher taxes are associated with low economic growth. Keho (2013) confirmed Keho (2010) results using the linear programming method. In Ethiopia, Dasalegn (2014) finds that VAT receipts contribute significantly to national development by adopting the ordinary least square approach. On the other hand, Edame and Okoi (2014) and Njogu (2015) discovered a significant negative association between tax and economic growth in Kenya. Within the West African Economic Monetary Union (UEMOA) economies, N’Yilimon (2014) applied a root test on panel data and found a non-linear relationship between taxation and economic growth. Finally, Onakoya et al. (2017) examined data between 2004 and 2013 for 16 African countries on the relationship between tax revenue and growth in Africa. The study concluded that tax revenues positively correlate with economic growth (GDP) but did not cover the effect of individual taxes. Even though studies have shown the effect of tax composition, reforms, or reviews on economic growth, the aspect of the economies affected by the various taxes for policy purposes is limited. University of Ghana http://ugspace.ug.edu.gh 32 Therefore, understanding tax burdens and their implications on development outcomes such as poverty in the context of household dynamics is essential. 2.6.2 Incidence of Taxes The tax burden is a critical component of tax policy analysis but is usually under-researched in developing economies—such economies over-rely on domestic revenue mobilization. Matthaei (2020) conceptually clarifies that tax burdens can be distributional, procedural, and or can redistribute justice. Distributive justice refers to allocating tax burdens, either statutory or economic burdens. Procedural relates to the means of distributing taxes, and redistributive justice refers to the treatment effect of taxes (Matthaei, 2020 ; Kirchler et al., 2008). Literature shows that for many taxes, the final burden of the tax often falls on the final consumer. Studies on tax incidence are also inconclusive due to dynamic population and economic and political variables. Issues of equity, fairness, and consistency require policy reviews and reforms by country governments (Lustig, 2018). Thus, it suggests that fiscal policy should be dynamic to satisfy emerging economic trends. For instance, a fiscal policy with a gender focus is necessary because taxes can restrict women from entering the labour market, close the gender gap, and reduce and improve women's acquisition of assets (Onakoya et al., 2017). The section discusses tax burden literature focusing on household groups and gender dimensions. The most dominant and recent methodologies focusing on fiscal policy, particularly tax incidence and poverty, have used Commitment to Equity Assessment (CEQ). CEQ provides a comprehensive and systematic procedure for estimating tax effects on poverty under different income concept scenarios, allowing cross-country comparisons. However, CEQ assessment often uses household survey data with government fiscal data and income (direct and indirect transfers) University of Ghana http://ugspace.ug.edu.gh 33 to analyse tax effects, hence inheriting weaknesses. Limitations include the drawbacks of using an income approach to measuring poverty, such as income being underreported and inadequate data on income, especially in developing countries. In Ghana, not many studies concentrate on tax burdens. The available studies on tax incidence are also not current, so there is a need to determine the current situation for a good tax policy mix. However, the literature shows historical studies on Ghana's tax burden. Younger (1996) employed a partial equilibrium analysis using the 1988/1989 GLSS data and found indirect taxes generally regressive and direct taxes proportional or progressive. The study did not include the distributions of the tax burden among various household groups but generally focused on tax burden by quantiles and deciles. Colatei and Round (2000) used the multisectoral CGE model but did not focus on the distributions of the tax burden. The study found that the cost of alleviating poverty through taxes and cash transfers impacts household welfare. Aryeetey et al. (2010), as found in Grown and Valodia (2010), examined the gender dimensions of indirect tax incidence in Ghana using the GLSS round 5 data. The study concentrated on VAT, fuel, and excise taxes by gender, household groups, and consumption categories and based on the Cost of Individual Consumption by Purpose (COICOP). The study employed the tax expenditure ratios and used expenditures as a proxy for income. Gendered analysis shows that male-type households bear higher tax burdens on transport, clothing, and fuel compared to their female counterparts. In addition, the study simulated two policy options to reduce the tax burden on poor and female families and found that reducing the tax burden for poor and female families can be financed by tax revenues from sin goods (tobacco and alcohol). The study found that removing University of Ghana http://ugspace.ug.edu.gh 34 tariffs on clothes and footwear will have an insignificant effect on male-headed and female-headed households. On the other hand, financing policies via the increase in the taxes of sin goods affect male-headed households more than female-headed households (Aryeetey et al., 2010). Even though the study points out critical policy implications for gender-tailored taxes, it is outdated as they have added two rounds of the GLSS after the survey. The study also did not trace the historical dynamics in tax incidence as it is one cross-sectional study and did not trace the household responses to tax changes. The study is also limited, as it did not include the spillover effect (effect on male-headed household consumption) of raising taxes on sin goods that affect men more than women. The most recent study on the distributional effect of Ghana’s VAT regime on price and burden in Ghana is by Andoh (2021). The study employed rounds 4, 5, 6, and 7 of the GLSS household survey data and the input-output data for selected years in Ghana. The study used the Leontief input-output equation to estimate the VAT increase in price. Findings show that VAT increases the cost of goods and services for consumers, but the extent of growth varies with the goods. (Andoh, 2021). The study further found VAT burdens gradually shifted from progressive to regressive depending on the episode. For instance, VAT remains progressive at 10% and 15% but regressive at 17.5%. As a result, households in the first decile pay 2.3% of expenditure as VAT. It increases to 2.6% for the third decile and up to 3.9% for the tenth decile at 15% VAT. For regressive VAT burden at 17.5%, about 2.3% of the lowest household expenditure is VAT and reduces to 1.45% in the sixth decile to 0.92% for the tenth decile. The study further simulated the shift of VAT from progressive to regressive with the change in rates from 15% to 17.5% for the same data set and the same VAT rate for other rounds of the GLSS data set. Findings suggest that University of Ghana http://ugspace.ug.edu.gh 35 the VAT burden changes from progressive to regressive when consumption expenditure changes but depends on the commodity (Andoh, 2021). In contrast, reversing the trends of VAT incidence by consumption changes is daunting (Andoh, 2021). Even though the study has tremendous policy implications, the study did not expose the VAT incidence by household demographic variables such as gender and locality types. The study also focused on VAT and no other indirect taxes, such as excise and fuel taxes. On the other hand, Adoho and Gansey (2019) found VAT to be progressive in the Democratic Republic of Congo. In South Africa, Budlender et al. (2010) used the Income and Expenditure Survey (IES) 2000 to examine gender equality and taxation. Findings show that households with male breadwinners bear the highest incidence of the total tax of 9.36%, followed by households with adult male-majority composition (9.23%), households with dual-earner (9.15%), and households headed by males (9.06%). VAT is the higher contributor to all household tax burdens. Male-breadwinner households have a higher total tax incidence than female-breadwinner households, mainly in the third, fourth, and fifth quintiles. Also, the tax burden for dual-earner households with children was (10.02%), and those without children (10.35%) were in the third quintile. Dual-earner households without children have high total tax incidence (Budlender et al., 2010). The study further simulated the impact of zero-rating additional products that could benefit poor female breadwinner households and households without employment. Findings show that zero- rating children’s clothing provides more benefits regarding income equality. In contrast, zero- rating the other items generally did not produce colossal gender equality outcomes in quintile terms (Budlender et al., 2010). The data used in the study is old, and the analysis did not include rural and urban dimensions; hence, recent research to trace current dynamics for policy purposes is worthwhile. University of Ghana http://ugspace.ug.edu.gh 36 Ssewanyana et al. (2010) focused on gender equality and taxation in Uganda. The study used the Ugandan National Household Survey III and administrative data from the Ugandan Revenue Authority and covered household categories based on the sex of household headship, sex composition, and employment status of adult members. The study finds that male-headed households bear a higher tax incidence (5.22%) than female-headed households (4.11%) across VAT, excise duties, and fuel taxes. Adult male-majority households also bear more tax burden (5.52%) than adult female-majority households (4.28%). In addition, tax incidence by employment status and presence of children shows that breadwinner households in the fifth quintiles bear high tax incidence. Also, a household with no employed and with no children in the fifth quintile has a total tax burden (of 4.92%), followed by households with no-employed (4.61%) and households with no-employed head with children (4.23%) (Ssewanyana et al., 2010). By commodity consumption, a high tax burden (1.25%) is on food for male-breadwinner with children mostly from households in the second to the fifth quintile. On the other hand, all-female breadwinner households bear a high total tax incidence (1.11%), with households in the fourth quintiles having the highest burden. In policy simulation, the study assumed the addition of salt and kerosine to exempted items (Ssewanyana et al., 2010). The study finds that households in the lower quintiles will benefit regardless of household sex composition, as salt is in high demand. At the same time, the overall impact of a 50% cut in the levy per liter on kerosene or paraffin is small and benefits female households less than their male counterparts. The study also failed to explore the rural and urban dimensions. Rural-urban analysis plays a critical role in policy interventions, as literature shows more poor households are in rural areas in Africa. Using the framework of Grown and Valodia (2010) for a gendered analysis of taxation, Enríquez et al., (2010), in the study of gender equality and taxation in Argentina, found that the total indirect University of Ghana http://ugspace.ug.edu.gh 37 tax burden is proportional and a bit regressive between male-headed household (16.97%) and female-headed households (16.78%). Even though the incidence of VAT (13.82%) is higher than that of Excise tax (1.26%) and fuel tax (1.70%), the difference in burden between the male- majority (13.9%), the female majority (13.8%), and equal-adult households (13.8%) are not significant. The indirect tax incidence increased from 16.2% in the first quintile to about 17.2% in the fifth quintile, suggesting some progressivity (Enríquez et al., 2010). While the incidence is high for expenditure on communication, food, utilities, and transport for female-breadwinner households, the incidence is also regressive and high for consumption of baby products, lubricants, and fuel for male-breadwinner households. The rural-urban results are missing in the study; hence, there is no opportunity to ascertain the burdens on the poverty status of the various household groups in rural and urban areas. Chakraborty et al. (2010) analysed India's unequal burden of taxes. The study used consumer expenditure and tax data from the middle-income state of West Bengal, where revenues from VAT make up the highest (59%) of state revenues. The sample consists of 7,877 consumers (rural and urban). Findings show that households in the first quintile bear the highest incidence of total tax (1.37%) in both rural (0.83%) and urban (3.89%) homes but with higher regressivity among urban households. Even though female-headed families receive a higher VAT burden (2.12%) than male- headed families (2.08%), male-headed households receive a higher tax incidence from excise (0.05%)