Political Institutions and the Policy Process in Ghana: The Case of the Value-Added Tax (VAT).

Abstract

This paper seeks to explain differences in policy outcomes even when political institutions remain unchanged over time. It studies the making of Ghana’s most important fiscal policy after its transition to democracy in 1993. This study focuses on the making of the Value Added Tax (VAT) policy at two different time periods. In spite of unchanging political institutions, each episode, in 1995 and 1998, had a different outcome. This paper explores the extent to which the preferences of institutional actors can account for policy changes under the constraints and opportunities created by those same political institutions within the policymaking process. The paper employs George Tsebelis’ veto player theory, which emanates from the rational choice institutionalist school and argues that, when political institutions remain unchanged over time, changes in veto players’ preferences can account for changes in the policy outcome of the VAT.