The determinants of tax revenue in sub-Saharan Africa
Year: 2012
Type: article
Abstract: This paper identifies the determinants of tax revenue in sub-Saharan Africa using an unbalanced panel dataset of 39 countries over the period 1980-2005. A set of factors that can potentially influence tax revenues such as the tax base, structural factors, foreign aid and conflict, is considered in the econometric analysis. Our contribution is that besides the analysis of the determinants of the overall tax revenue, we further conduct the analysis about how these determinants affect the tax structure by including mainly three tax types including the international trade taxes, domestic indirect taxes, and domestic direct taxes. Firstly, our results significantly suggest that the overall tax to GDP ratio is higher in more open and less agricultural dependent economies, less populous and peaceful countries. The introduction of VAT also has a significant positive impact on the total tax-GDP ratio. We find evidence of relationships between the effect of openness and per-capita GDP on the trade-tax GDP ratio. The size of the agricultural sector and foreign aid affects the direct-tax GDP ratio negatively. VAT and a peaceful environment have a significant positive impact.
Authors: Tony Addison, Jörgen Levin
Language: English
Topic: Economic and Fiscal Studies
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1575914019