TAX REVENUE COMPONENTS AND ECONOMIC GROWTH OF AFRICAN COUNTRIES

Fineboy Ikechi Joseph 1 , John Uzoma Ihendinihu 2 and Michael Chidiebere Ekwe 3
1 Department of Accounting, Faculty of Social and Management Sciences, Clifford
University, Ihie, Abia State. E-mail: fayooxyz2009@yahoo.com
2&3 Department of Accounting, College of Management Sciences, Michael Okpara
University of Agriculture, Umudike. ihendinihu.john@gmail.com and
ekwemike@yahoo.com

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 Gross Domestic Product, and four components of tax revenue of ten selected
African countries were extracted from the websites of the World Bank, International Centre 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 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.
KEYWORDS: Foreign Direct Investment, Economic Growth, Gross Domestic Product, Tax Revenue

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