TAX REVENUE COMPONENTS AND ECONOMIC GROWTH OF AFRICAN COUNTRIES

TAX REVENUE
COMPONENTS AND ECONOMIC
GROWTH OF AFRICAN
COUNTRIES
Fineboy Ikechi Joseph 1 , John Uzoma
Ihendinihu 2 and Michael Chidiebere
Ekwe 3
University of Agriculture, Umudike.
ABSTRACT
This study evaluates the causal link between
tax revenue and economic growth of African
Countries. The aim is to ascertain the extent to
which different components of tax revenue
can be useful in moderating economic growth
of emerging economies in Africa. Time series
data of 38 years on Real Gross Domestic
Product, and four components of tax revenue
of ten selected African countries were
extracted from the websites of the World
4
Department of Accounting, Faculty of
Social and Management Sciences, Clifford
University, Ihie, Abia State.
fayooxyz2009@yahoo.com
&
5&3
Department of Accounting, College of
Management Sciences, Michael OkparaBook of Abstract
Bank, International Center for Tax and
Development, and African Statistical Year Book
publications and analysed using OLS regression
techniques. Results show that Customs Excise
Duties (CED), Personal Income Tax (PIT),and
Value Added Tax (VAT) have significant effects
on changes in Real GDP, while Company
Income Tax (CIT) does not affect the growth
rate significantly; with all components jointly
accounting for substantial variations in
economic growth of the countries. The paper
concludes that tax revenue is a potent tool for
improving economic growth of emerging
African nations and recommends that
government and tax administrators should
target at enhancing tax revenue with emphasis
on indirect tax components by blocking all
avenues of tax evasion and maintaining proper
accountability of collected tax revenues to
achieve sustainable economic growth in the
African continent.

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