Tax Revenue and Performance of the Economy of African Countries
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 Per Capita Income 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 company income tax has a positive insignificant effect on per capita income of African countries. Personal income tax a positive insignificant effect on per capita income of African countries. Value added tax has a positive insignificant effect on per capita income of African countries. Custom and excise duty has an insignificant negative effect on per capita income of African countries. The paper concludes that tax revenue potential is yet to be tapped by emerging African nation for the improvement of their economies and recommends that government and tax administrator should aim at increasing tax with emphasis on indirect tax components through closing channels of tax evasion and maintaining proper accountability of collected tax revenues to achieve sustainable economic growth in the African continent.
Keywords
Economic GrowthAfrican CountriesPer Capita IncomeTax Revenue
References
Anne, W.H. (2014). Income taxes and economic performance in Kenya. A research paper submitted to the University of Nairobi, school of economics, in partial fulfilment of the requirements for the award of Masters of Arts degree in Economics. Abiola, J. & Asiweh, M. (2012). Impact of tax administration on Government revenue in a developing economy: A case study of Nigeria. International Journal of Business and Social Science, 3(8), 35-43. Adegbie, F.F. & A.J. Fakile (2011). Company Income tax and Nigeria Economic development. European Journal of Social Sciences, 9(1), 109-121. Appah, E. &Eze, G. P. (2013). A Causality Analysis between Tax Audit and Tax Compliance in Nigeria. Journal of Economic Literature, 12(5), 37-49. Afuberoh, O.D., & Emmanuel,O. (2014). The Impact of Taxation on Revenue Generation in Nigeria. Research Centre for Management Sciences and Social Studies, 1(3). Anne, W.H. (2014). Income taxes and economic performance in Kenya. A research paper submitted to the University of Nairobi, school of economics, in partial fulfilment of the requirements for the award of Masters of Arts degree in Economics. Barro, R.J. (1996). Determinants of economic growth: A cross-country empirical study. NBER Working Paper 5698. National Bureau of Economic Research publication. Babatunde, O. A., Ibukun, A. O., &Oyeyemi, O. G. (2017). Taxation Revenue and Economic Growth in Africa. Journal of Accounting and Taxation, 9(2): 11-22. Baghebo, M. & Edoumiekumo, S. (2012). Public capital Accumulation and Economic Development in Nigeria 1970 -2010. International Journal of Academic Research in Business and Social Science, 2(6), 213-237. Confidence, J.I., &Ebipanipre, G.M. (2014). Taxation as an instrument of economic growth (The Nigerian perspective). Info. Knowl. Manage. 12 (4). Chigbu, E. E. &Njoku, C. O. (2015). Taxation and the Nigerian economy (1994-2012). Journal of Management Studies and Economic Systems, 2(2), 111-128. Dasalegn, M. J. (2014). Value Added Tax as a Tool for National Development in Ethiopia. Research Journal of Finance and Accounting, 5(15): 184-190. Engen, Eric M., & Jonathan, S. (1996). Taxation and Economic Growth. National Tax Journal 49 (4):617-42. Enahoro, J.A. &Olabisi, J. (2012) Tax Administration and Revenue Generation of Lagos State Government, Nigeria. Journal of Finance and Accounting, Vol 3, No 5 (2012) p.133-139. Eke, O. A., Ekwe, M. C., & Ihendinihu, J. U. (2019). Impact of Tax Revenues on Economic Growth of Nigeria. Proceedings of the 8th International Conference of Accounting and Finance Research Association (AFRA), held 4th - 6th November, 2018. Edame, G. E., &Okoi, W. W. (2014). The Impact of Taxation on Investment and Economic Development in Nigeria. Academic Journal of Interdisciplinary Studies. 3 (4): 209-218. doi: https://doi.org/10.5901/ajis.2014.v3n4p209. Retrieved on 5/6/2020. Ezejelue, A.C & Ihendinihu, J.U. (2006). Personal Income Taxation in Nigeria. Llins Consult Nig, Okigwe. Gbato, A. (2017). Impact of Taxation on Growth in Sub-Saharan Africa: New Evidence Based on a New Data Set. International Journal of Economics and Finance, 2017, 9, 10.5539/ijef.v9n11p173. hal-01673738. Gbato, A. (2017). Impact of Taxation on Growth in Sub-Saharan Africa: New Evidence Based on a New Data Set. International Journal of Economics and Finance, 2017, 9, 10.5539/ijef.v9n11p173. hal-01673738. Hakim, T. A. (2016). Does goods and services tax stimulate economic growth? International evidence. Journal of Business and Retail Management Research, 10 (3). Ihendinihu, J.U, Ebieri J., &Ibanichuka, A. E. (2014): Assessment of the Long-Run Equilibrium Relationship between Tax Revenue and Economic Growth in Nigeria: 1986 to 2012. The SIJ Transactions on Industrial, Financial & Business Management (IFBM), 2(2) March-April, 2014. Igbasan, E. (2016). Tax Revenue and Economic Growth of Nigeria (1981-2015) Being a dissertation submitted in the Department of Accounting, School of Management Sciences. Babcock university IlishanremoOgun state Nigeria (published). Ihenyen, C.J, &Mieseigha, E. G. (2014). Taxation as an instrument of economic growth: The Nigerian perspective. Journal of Information and Knowledge Management 4(12), 49-53). Joseph, F.I., Omodero, C.O., &Omeonu, O. M. (2019). The Role of Tax Revenue and Foreign Direct Investment in Promoting Economic Progress in Nigeria. Annals of Spiru Haret University. Economic Series, 10 (19). Issue 3, 2019. Kiabel, B. &Nwokah, N. (2009). Boosting revenue generation by state governments in Nigeria: The tax onsultants option revisited. European Journal of Social Sciences, 8(4), 66-75. Keho, Y. (2010). Estimating the growth-maximizing tax rate for Cote d'Ivoire: Evidence and Implications. Journal of Economics and International Finance, 2(9), 164. Lawrence, K.N. (2015). The effect of value added tax on economic growth in Kenya. Int. Acad. Journal of Economics and Finance 5(1):10-30. Micah, L., Chukwuma, E. &Umobong, A. (2012). Tax system in Nigeria: Challenges and the way forward. Research Journal of Finance and Accounting, 3(5), 1-14. N'Yilimon, N. (2014). Taxation and Economic growth: An empirical analysis on dynamic panel data of WAEMU countries. MPRA. Nwawuru, C. E., Nmesirionye, J. A., & Ironkwe, U. I. (2018). Analysis of the impact of value added tax on total federally collected revenue in Nigeria (1994-2012). A Paper presented at the 8th Annual Int'l Conference of AFRA held in December 2018 at UNICAL. Ogbonna, G. &Ebimobowei, A. (2012). Impact of tax reforms and economic growth of Nigeria: A time series analysis. Current Research Journal of Social Sciences, 4(1), 62-68. Owens, J. (2006). Tax in a borderless world. Journal of Political Education, 41(11), 38-50. Ogbonna, G.N, & Appah E (2012), Impact of Petroleum Revenue and the Economy of Nigeria. Current Research Journal of Economic Theory, 4(2): 11-17, 2012. Ogbonna, G.N, & Appah E (2012), Impact of Petroleum Revenue and the Economy of Nigeria. Current Research Journal of Economic Theory, 4(2): 11-17, 2012. Piroska, B. B. (2021). Practical Tools for International Development. Poulson, B. & Kaplan, J. (2008). State income taxes and economic growth. Academy of Management Review, 28(1), 12-37. Pfister, M. (2009). Taxation for investment and development: An overview of policy challenges in Africa. In A Background paper to the Ministerial Meeting and Expert Roundtable of NEPAD-OECD Africa Investment Initiative 2009 Nov (pp. 11-12). Sekou M (2015). The impact of tax collection in achieving revenue targets: The Directorate General of taxes of Mali case study. Theory. Econ. Lett. 5:403-409. Retrieved on 14/1/2021 from http://dx.doi.org/10.4236/tel.2015.53046. (athttp://data.un.org/). Robert, G. K., & Sergio R. (1990). Neoclassical Implications National Bureau of Economic Research. Working Paper No. 3338. 1050 Masaarhusetts Avenue Cambridge, MA 02138 April 1990. Robert, G. K., & Sergio R. (1990). Neoclassical Implications National Bureau of Economic Research. Working Paper No. 3338. 1050 Masaarhusetts Avenue Cambridge, MA 02138 April 1990. Saibu, O. M. (2015). Optimal tax rate and economic growth. Evidence from Nigeria and South Africa. Euro Economica, 34 (1). The-World-Bank-Group: https://data.worldbank.org/indicators/GC.TAX.TOTL.CN. Ugwunta, O. D. (2015). Effect of distortionary and non-distortionary taxes on economic growth: Evidence from Sub-Saharan African countries. Journal of Accounting a nd Taxation, 7(6) retrieved on 23/7/2019 from106.https://doi.org/10.5897/JAT2015.0175.
More Articles from JOURNAL OF ACCOUNTING AND FINANCIAL MANAGEMENT
Operational Resilience in Financial Services: An Integrated Risk, Control, and Analytics Framework
Author: Funmilayo Ashore-Onisemo, Uchechi Mary-Linda Unamma
Impact of Data Analytics Adoption on Audit Quality in the Public Sector Accounting Reporting
Author: Ikenna, Ogochukwu Eunice
Cashflow Management and the Performance of Commercial Banks in Nigeria
Author: Jeffrey Ayas Iyakonbogha, Clement E. Ozele
Artificial Intelligence-Driven Internal Control Systems and Cybercrime Prevention in Nigerian Deposit Money Banks
Author: Fasola Job Adedokun, Olojede Samson Olusola FCA
The Nigerian Code of Corporate Governance and Financial Performance of Deposit Money Banks in Nigeria
Author: i, Eneaniofu Daniel Mmaduakonam, ii, Azolike Nkiru Nkechi, iii, Emeter Patrick Okechukwu, iv, Okwor Emmanuel Ejimnkonye