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Financial policy

Effect on increase in tax on products and cost of living

A tax is a mandatory financial charge or another type of tax levied on a taxpayer (a natural or legal person) by a government agency for public expenditure and various public expenditure. Failure to pay, as well as prevention of fraud or taxation, is punishable by law.

Taxes are a combination of direct or indirect taxes and can be paid as equivalent to money or labour. The first introduction was made in ancient Egypt around 3000-2800 BC.

Most countries have a tax system to cover public, general or nationally agreed needs and government functions. Some impose flat-rate tariffs on annual personal income, but most taxes are based on annual income.

Most countries levy personal income tax as well as corporate income tax. Countries or sub-units also often impose a property tax, inheritance tax, inheritance tax, gift tax, property tax, sales tax, salary-tax or duty.

In economic considerations, the tax transfers from the acquired property or family to the government. It has implications that can both reduce economic growth and economic well-being. Thus, taxation is a hotly debated issue.

Tax is the amount of money imposed on goods and services. Tax can be direct or indirect depending on how is been imposed.

The imposition of tax has become a challenge in Ghana for some years back because the economic situation of the citizens are not good while most Ghanaians are low-income earners.

Taxes have a slot of positive effect in the country, but this article will consider only the negative aspect.

When taxes are imposed it affect the consumers much and sometimes most of the taxes in Ghana affect the poor more than the rich.

So we often hear the citizens crying out whenever taxes are imposed, and even the recent taxes from the 2021 Budget has become even worst as fuel and other energies are been tax increased.

When taxes are been increase or impose it comes with a lot if effect which is mostly negative. Let see some of the negative effects on taxes.

1. Increase in cost or price of goods and services.

As we said earlier taxes are imposed on goods and services, so when this additional cost is been added to the cost of the goods and the services, the seller or the producer will also add it to the cost of the product, passing it to the consumer at last hence making things costly.

2. High Cost of living.

With the explanation of the above point, we can see that when these goods and services are been increased in price and cost it makes it difficult for the consumer being the citizens to purchase more making the living uncomfortable for them.

3. Increase In taxes can leads to inflation.

When these taxes are imposed the producer's cost of manufacturing becomes high including any cost of productions except fixed cost in the long run meaning even in the short run it affects the fixed cost as well.

When it becomes that these productions are increased sometimes the producers may produce small quantities leading to inflation, that more money chancing fewer goods.

We have a lot of negative effect on taxes, my opinion or what I think about the imposition of the tax is to be moderate for every citizen to pay hence improving the development of the country.

Content created and supplied by: donnadjer (via Opera News )



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