The Bearings of Petroleum Taxes on Gross Domestic Savings

Purpose: The purpose of this paper was to estimate the effects of petroleum taxes on gross domestic savings in Ghana. Design/Methodology/Approach: This post positivist quantitative study used secondary data in the form of historical time series tax data, gathered from the ministry of finance and economic planning, and the Ghana statistical services was sourced for data on Ghana’s gross domestic product. Other relevant bases were also sourced for pertinent information. Correlation analysis was initially used to measure the strength and direction of association that existed between the variables. A series of multiple regression analyses were then run to predict the extent to which petroleum tax affects gross domestic savings in Ghana. Findings: The results revealed strong, positive and statistically significant correlations between all the independent variables studied. However, there was a moderate positive correlation between petroleum tax and domestic saving rates which was statistically significant. Also, the results of the multiple regression analyses run indicated that only excise tax statistically significantly predicts domestic saving rate, F (2, 10) = 7.544, p < .05, \({R}^{2}\) = 0.883. Implications/Research Limitation: It is projected that the verdicts of this study would meaningfully contribute to literature on the general effects of taxes, especially the effects of petroleum tax on gross domestic savings. However, the study relied solely on secondary data and any inconsistencies in the data may have effects on the findings. Practical Implication: The findings of the study could provide guidance for policy makers on the adaptation of a suitable matrix of taxation that would avert deadweight losses in the economy, and proliferate gross domestic savings in Ghana. Originality/Value: This study examined the effects of petroleum tax on gross domestic savings in Ghana, and sought to fill a critical research gap that was identified.