RESEARCH PROPOSAL BY GROUP 26

RESEARCH PROPOSAL
BY
GROUP 26
THE EFFECTS OF HIGH RATES OF TAXES ON INDIVIDUALS AND CORPORATE INSTITUTIONS, (A CASE STUDY OF THE ACCRA METROPOLIS)
Background of the study
Government revenue is one of the major criteria through which many governments and states finance their developmental and economic projects. In most case the revenue to the government comes through the tax revenue or through the taxation of indigenes personal incomes and income to corporate institutions. In Ghana, revenue to the government is gotten mainly through the tax system; and the Internal Revenue Service (IRS) under the ministry of finance and economic planning of the republic of Ghana is tasked with the function of administering taxes. Income tax administration started in the then gold coast in September 1943, with the passing into law of the income tax ordinance No. 27 of 1943 on 22nd September, 1943 but now replaced by Internal Revenue Service Act 2000, (Act 592) in the year 2000.
In Ghana as well as most developing countries, tax revenue to the government is used for but not limited to the following; the provision of infrastructural development i.e. good roads, schools portable water, provision of health and sporting facilities, electricity etc. it is also used for maintenance of law and order for the security of the state and all individuals, pay salaries of government employees e.g. Doctors, teachers, civil servants etc. so as to keep government business running, for the provision of welfare services e.g. GETFUND, NHIL etc. in the light of the above mentioned uses, the government levies taxes on the individuals personal income and the income that accrue to corporate organizations or institutions. But one cannot under estimate the fact that high tax rate impacts on the individual as well as corporate institutions in the country. As taxes appreciate in rates, there is pressure on both the lay person income and income to the business of corporate institutions. The tax system in Ghana is made up of direct and indirect taxes. Direct tax is a government levy on the incomes, property or wealth of people or companies. A direct tax is borne entirely on the entity paying it and it is not passed on to another entity. Examples include; corporate tax, income tax, social security contributions etc. and indirect tax on the other hand is a charge levied by the government on consumption, expenditure, privilege or right but not on income or property. Examples include; duties levied on imports, excise duties on production, sales tax or value added tax (VAT), etc.
The effects of high rates of taxes on the individuals and corporate institutions can be seen in the following but not limited to; firstly, Effects on income of individuals- high tax rates leads to low wages and salaries of low income earners, which leads to pressure on family’s living on low income and this, will reduce their purchasing power and consequently their consumption pattern. Secondly, On producers – high tax rates will increase the cost of production and producers will intend increase the prices of their goods and services and in order for producers to cut down cost they will reduce wages which will intend lead to low productivity and some producers will begin to produce shoddy goods in other to cut down their share of the tax. And thirdly, it will also affect interest rates- i.e. a high tax rates on individuals will reduces the purchasing power of individuals which will intend increase aggregate demand and this decrease in aggregate demand will reduce their interest in borrowing money from banks. Hence as banks will be willing to give loans to investors, they will reduce their interest rate on loans given to investors. Etc. Other salient issues of concern are discussed in chapter three.
Statement of the problem
In Ghana as well as many developing counties, the source income for government to finance developmental projects is through the tax revenue system, i.e. the taxes levied on income to self-employed individuals like drivers, petty traders, farmers, hairdressers, photocopy shop owners, etc. and on income to corporate institutions like; companies, factories, industries ,corporations etc. the question one may ask is “are there any effects high rate of taxes have on individuals and corporate institutions”? Other salient issues are the concern of this research.
Review of Relevant literature
It will focus on theoretical literature review, empirical literature review and institutional framework will be considered.
Theoretical literature review
Meaning and scope of taxation in Ghana
The effects of tax in Ghana
The link that exist between individuals and corporate institutions and tax
The implications of high rate of taxes on individuals and corporate institutions.
Empirical literature review

Objective of the study
The main objective of the study is to analyze in general the effects of high rates of tax on individuals and corporate institutions in the country.
Specific objectives
To identify the number of tax paying individuals and corporate institution in the metropolis
To identify the welfare and state of individuals and corporate institutions before tax levy in the metropolis
To identify the welfare and state of individuals and corporate institutions after tax was levied in the metropolis
To examine the effects high rate of taxes have on individuals and corporate institutions in the metropolis
Research question
What is the welfare and state of individuals and corporate institution before tax levy in the metropolis?
What is the welfare and state of individuals and corporate institutions after tax was levied in the metropolis?
What effect has high rate of taxes have on individuals and corporate institutions in the metropolis?
Significance of the study
The study is to help establish a sound and wide base of the effects that high rate of taxes poses on both individuals and also on corporate institution in Ghana especially Accra and other industrial cities of the nation as well as other developing countries. The outcome of this study whether favorable or unfavorable is to help policy makers to re-strategize effective ways of levying tax on individuals and corporate institutions in the country that will not militate their contributions to national output but will rather act as a catalyst in promoting and progressing national productivity hence national output.
Organization of the study
The study will take the following forms;
Chapter one will deal with the background of the study, statement of the problem, main or broad objective and specific objectives of the study, significance of the study and the organization of the study.
Chapter two will focus on literature review; it will begin with theoretical, empirical and institutional framework, effects of high rates of taxes on individuals and corporate institutions.
Chapter three will talk about the methods used in collecting the data for the study, the introduction, population, target population, research design, Sample size, and sampling techniques, data presentation and instruments that will be used and the limitations of the study.
Chapter four will be concern with data analysis, presentation and interpretations of findings.
Chapter five will sum up the entire work of the study, which comprises the introduction, summary, conclusion and some recommendations.

Methodologies
Population
The main population of the study consists of tax paying individuals and corporate institutions within the metropolis as the research is centered on the effects of high rate of taxes on individuals and corporate institutions. There are lots of active tax paying individuals and corporate institutions in the metropolis, they comprises self-employed individuals like drivers, petty traders, hairdressers, farmers, photo copy shops and companies and corporations like Dokas Law Trust, Danny Real Estate consultant Ghana Ltd., Project and change management consult, Royal Gulf club and beach resort, Lip star company Ltd., Manpul Ghana Limited, Forever Bio Ghana Limited, Barclays Bank of Ghana Ltd., Atona foods company Limited Tesano etc. The metropolis has an estimated population size of about 2,291,352 as at 2012. For the purpose of this study only tax payers within the metropolis will be selected for the study.

Target population
The target population comprises only those tax payers that serve in the metropolis. Because they could provide adequate information that will be needed for the study, it must be noted that more than five hundred of the subjects, both individuals and corporate institution inclusive, pay their taxes hence five hundred target population would be needed for the study.

Research Designs The research design that will be used to collect data will be descriptive survey method, which will be carried out randomly in a form of a self –administered questionnaires. According to Green(1987), the descriptive survey method involves collecting data about a subject variable in order to answer certain questions concerning the current position of the subject under study.
Sample size and Sampling Procedures The sample size for the research work will include one hundred and fifty(150) people, that is 30 percent of the total target population of five hundred (500).However, not all the one hundred and fifty(150) people could be included in the research work due to time factor and financial austerities. As a result, eight five(85) respondents out of the total sample size will be included in the research work; The respondents will be selected through simple random sampling and purposive sampling procedure.
Data collection Procedures and Instruments
The research instrument that will be used in collecting data will be in a form of structured questionnaire and interview schedule. The questionnaire will be structured to cover the close-ended and open-ended questions. Definitely, some respondents will not be able to write and read so interviews will be conducted for such respondents. Eighty- five questionnaires will be printed containing information relating to the objectives of the study.
Data Presentation and Analysis of Procedures Data will be presented in a form of visual presentation. In analyzing the data, a statistical software tool called statistical software package for the social sciences(SPSS) may be used. SPSS is a program design to calculate the number of participants required to demonstrate desire effect size.
Limitations of the study
The major limitations of this study were time and financial constraints. Due to limited amount of time allotted for this work we could not go to the grass roots for data collection, hence we made use of secondary data sources in conducting the study, notwithstanding that there were also financial constraints which hindered the procurement of required resources and materials for the study.
Budget
In all, the entire research process cost us the sum $50.00 and the breakdown of expenses are as follows;
Water and food
$ 5.00
Transportation
$ 5.00
Materials
$ 20.00
Printing
$ 10.00
Questionnaires
$ 10.00

Time
The total time taken to carry out this research is not more than two (2) weeks
References
I. Johnson, Richard, 2004. "Taxation and Domestic Free Trade," Ratio Working Papers 40, The Ratio Institute, revised June 7, 2004.
II. Smith, Adam (2005), Wealth of Nations, Penn State Electronic Classics edition; p.704
III. http://www.gra.gov.gh‎
IV. http://www.wikipedia.org/wiki/irs/Ghana‎

References: I. Johnson, Richard, 2004. "Taxation and Domestic Free Trade," Ratio Working Papers 40, The Ratio Institute, revised June 7, 2004. II. Smith, Adam (2005), Wealth of Nations, Penn State Electronic Classics edition; p.704 III. http://www.gra.gov.gh‎ IV. http://www.wikipedia.org/wiki/irs/Ghana‎