The underground economy and tax evasion in Ghana: Implications for economic growth

The objective of the study was to determine the size of Ghana’s “underground economy” and the extent of tax evasion in Ghana. The underground economy in most countries is vital because it serves as a survival place for most people. However, their activities are mostly related to tax evasion because their economic activities are mostly concealed from government tax authority agencies. The study used the Multiple Indicator Multiple Cause (MIMIC) model to estimate the size of Ghana’s “underground economy”. The data was obtained from the World Bank country indicators, Economic Freedom and Bank of Ghana and its spans from 1990 to 2020. The study is one of the premier to estimate the size of Ghana’s “underground economy” using the MIMIC model. The study found that the average size of Ghana’s underground economy is about 44% of the official GDP of the economy and is primarily caused by tax burden, government integrity, unemployment, government spending, self-employment, inflation and the agricultural sector employment. The estimated tax evasion due to the presence of the “underground economy” is, on average, about 6.28% of GDP. Other findings from the study were that, while tax evasion negatively affects economic growth, the underground economy’s size positively affects economic growth in Ghana. We recommend that since the underground economy, to some extent, provides job security to some individuals within the country, their activities must be formalized by ensuring proper documentation and registration. Furthermore, the government should improve the ways of detecting tax evasion through intensive tax audit.

本研究旨在测算加纳"地下经济（underground economy）"的规模以及加纳国内的逃税（tax evasion）程度。多数国家的地下经济对于民众生存而言至关重要，但其经济活动大多向政府税务征管机构隐瞒，因此其相关行为往往伴随逃税问题。本研究采用多指标多因（Multiple Indicator Multiple Cause, MIMIC）模型对加纳地下经济的规模进行估算。研究数据取自世界银行国别指标、经济自由度数据库以及加纳银行，时间跨度为1990年至2020年。本研究属于首批运用MIMIC模型测算加纳地下经济规模的研究之一。研究结果显示，加纳地下经济的平均规模约占该国官方GDP的44%，其主要驱动因素包括税收负担、政府廉洁度、失业率、政府支出、自雇就业、通货膨胀以及农业部门就业。因地下经济存在而产生的逃税规模平均约占GDP的6.28%。此外本研究还发现，尽管逃税对经济增长存在负向影响，但加纳地下经济的规模却对经济增长具有正向推动作用。我们建议，鉴于地下经济在一定程度上为国内部分群体提供了就业保障，应通过完善备案与登记流程推动其经济活动正规化。此外，政府应通过强化税务审计手段提升逃税行为的侦测效率。