VAT and Revenue Mobilisation in Ghana: An Empirical Assessment of Tax Administration Efficiency (2013-2023)

Abstract

Background: Value Added Tax (VAT) has become a central pillar of domestic revenue mobilisation in Ghana, yet persistent administrative and compliance challenges continue to constrain its full revenue potential. Aims:  This study empirically examines the contribution of VAT to total tax revenue and its implications for tax administration efficiency in Ghana over the period 2013 to 2023. Method: Using a mixed methods approach, the study combines time series data on VAT and total tax revenue with primary survey data collected from Ghana Revenue Authority officials in Accra Central and Accra West. Descriptive statistics, trend analysis, correlation, and regression techniques were employed to analyse revenue performance, administrative challenges, and compliance dynamics. Results: The findings reveal a strong and statistically significant positive relationship between VAT revenue and total tax revenue, with a correlation coefficient of 0.93 and an R-squared value of 0.87, indicating that variations in VAT revenue explain a substantial proportion of changes in overall tax revenue. Trend analysis shows that VAT revenue experienced notable fluctuations over the study period, reflecting macroeconomic conditions, policy changes, and administrative efficiency, with particularly strong growth observed between 2021 and 2023. Survey results further indicate that operational inefficiencies, limited automation, inadequate staff training, informal sector non-compliance, policy instability, and weak enforcement of penalties significantly undermine VAT administration.  Conclusion: The study showed that while VAT remains a critical driver of revenue mobilisation in Ghana, its effectiveness is heavily dependent on administrative capacity, policy consistency, and taxpayer compliance. Strengthening digital tax systems, expanding the tax net to include informal sector actors, enhancing staff capacity, and promoting taxpayer education are essential to improving VAT performance and sustaining long term revenue growth. The findings contribute to public finance literature by providing empirical evidence on the link between VAT performance and tax administration efficiency in a developing country context