Simply put, taxes are impositions, and they can only be imposed by an Act of Parliament. For this reason, there is the Income Tax Act, 2015 (Act 896) and its most recent revision, the Income Tax (Revision) (No. 2) Act, 2023 (Act 1111).

So what exactly are taxes in the widest sense? Act 896, which deals with charges, and Act 915, which deals with machines, both fail to specify taxation. It is important to remember, though, that the definition of taxation is heavily influenced by what is considered to be income (assessable). Paradoxically, statutes have also circumvented the notion of income.

As a result, taxes is a topic that represents an understudied idea with a hazy definition, unclear borders, and unclear internal organization.
However, taxation is defined as “the imposition or assessment of a tax; the means by which the state obtains the revenue required for its activities” by Black’s Law Dictionary.

It is important to note that Black’s Law Dictionary defines “the imposition or assessment of a tax” as a charge on income, and that income is a factor in determining what will be taxed.

winnings tax

Consequently, it was lawful to exclude taxing “winnings from the lottery” when income was determined using Adams Smith’s definition of income under the prior legislation. Ghana’s tax base was therefore used to Adams Smith’s idea for more than 70 years.

However, the definition of income as of the promulgation and enforcement of the Income Tax Act, 2015 (Act 896) appropriately adopted Haig-Simon’s notion, which includes, among other things, gifts, capital gains, stolen money, and lottery winners.

Referred to as “the assessable income of a person for a year of assessment is the income of that person from any employment, business, or investment,” subsection 1 of Section 3 of Act 896 is based on the Haig-Simon concept. Similarly, subsection 1 of Section 6, which addresses Income from Investment, states that “the income of a person from an investment for a year of assessment is the gains and profits of that person.”

The use of the conjuncture “and” here is a clear departure from subsection one of Section 9 of the now-repealed Internal Revenue Act, 2000 (Act 592), which uses a disjuncture “or” to address what is meant by a person’s income from an investment. Here, the legislature that legislated the Act meant income from any investment (including illegal income).