Company Income Tax and Economic Growth of Selected Anglophone and Francophone
African Countries: The VECM Approach

Uche Okoro, Orji
Lecturer, Department of Accountancy
Faculty of Economics and Management Sciences
Abia State University, Uturu
Nigeria.
ucheorji4real@gmail.com
Prof John Uzoma Ihendinihu
Lecturer, Department of Accountancy
College of Management Science,
Michael Okpara University of Agriculture, Umudike
Abia State Nigeria.
ihendinihu.john@gmail.com

This study examines the effect of company income tax revenue on economic growth of selected
Anglophone and Francophone African countries over the period 2000-2018. The study made use
of annual secondary data generated from World Bank Development indicator, OECD revenue
data base. These data are converted into quarterly data using Quadratic Match-Sum procedure
from E-views. The choice of this period is due to availability of data that cut across the countries
under investigation. The data was analyzed by means of Vector Error Correction Model using E-
views 10 package. The study reveals that company income tax (CIT) significantly but negatively
impacted on Real GDP in the long run in the Francophone countries like Madagascar and Rwanda
while company income tax negatively though insignificantly influences the Real GDP of the
Anglophone countries like Nigeria and Ghana. The findings also revealed that there is a short run
causal effect of company income tax on Real GDP in the selected countries. Based on the findings,
the study recommends among others, that to enhance the tax base of the selected countries
especially through the companies, a good environment for entrepreneurship and innovation to
thrive must be provided and employment opportunities should be created. Also, Government
should make it a routine to regularly furnish taxpayers with the basic objectives of its tax system
and reasons for modifications to make taxpayers see clearly the reasons to pay taxes as at when
due.
Keywords: Company, Income, Tax, Economic growth, VECM

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