Regional Economic Integration and Tax Revenue: East African Community

Nnyanzi, John Bosco; Babyenda, Peter; Bbale, John Mayanja

doi:10.11130/jei.2016.31.4.932

Cited by 17 publications

(12 citation statements)

References 10 publications

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“…A 1% increase in lagged tax revenue leads to 0.586% increase in tax revenue as a ratio of GDP holding other factors remaining constant. The finding is agrees with (Nnyanzi et al, 2016).…”

Section: Dependent Variable: Lntrsupporting

confidence: 90%

“…Here in less developing countries including East Africa higher population in cities are associated with lower incomes because of high cost of living which further leads to low tax revenue collection. The finding is consistent with Addison and Levin (2006) and Becker et al (1999); (Al-Hakami, 2008) and inconsistent with Nnyanzi et al (2016). In urban economy, though better off, offered limited opportunities for revenue generation.…”

Section: Dependent Variable: Lntrsupporting

confidence: 69%

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Determinants of tax revenue in East African countries: An application of multivariate panel data cointegration analysis

Terefe¹,

Teera²

2018

J. Econ. Int. Finance

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Domestic revenue mobilization has received growing attention in recent years as it has crucial national and international dimensions for sub-Saharan African (SSA) and East African countries. In most countries, tax has not increased with increasing development expenditures. In place, the share of tax revenue to gross domestic product (GDP) is declining and countries constantly rely on foreign capital inflow as a major source of the government budget. Thus, equally tax revenue is key for economic development, the study thought to empirically examine the key determinants of tax revenue in East African countries using a novel dataset ranging from 1992 to 2015 by employing panel data cointegration approach. Panel unit root test of stationarity based on the LLC, IPS and ADF test of stationarity shows that all variables are cointegrated of order one, I(1), except the variable inflation which is stationary at level. The model estimation was done using the FGLS and the dynamic panel data GMM model. The long run estimated equation from the FGLS results indicates that per capita GDP, foreign aid, trade openness, share of agriculture, share of industry and share of services have positive contribution for tax revenue of East African countries over the study period. On the other hand, urbanization, official exchange rate and rate of inflation have negative impact on the tax revenue to GDP ratio of the region. From the short run, PVECM one period lagged tax revenue and urbanization has negative impact on the current period tax revenue while two period lagged urbanization and official exchange rate has positive impact. Thus, the robust result of the study calls for an indication that tax revenue increases under stable macroeconomic environment. Hence, East African countries should therefore better pursue economic policies that at least reveal low inflation rate and favorable trade policies. Moreover, the countries are required to set prudent macroeconomic policy environment which create economic integrations among different sectors, mobilizes domestic resource and improve external trade policies to make each country's growth sustainable on the basis of domestic resource mobilizations. The cumulative effects lead to improved tax revenue collection of the region.

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“…A 1% increase in lagged tax revenue leads to 0.586% increase in tax revenue as a ratio of GDP holding other factors remaining constant. The finding is agrees with (Nnyanzi et al, 2016).…”

Section: Dependent Variable: Lntrsupporting

confidence: 90%

Section: Dependent Variable: Lntrsupporting

confidence: 69%

Determinants of tax revenue in East African countries: An application of multivariate panel data cointegration analysis

Terefe¹,

Teera²

2018

J. Econ. Int. Finance

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“…Studies that have considered the quality of governance as a determining factor of tax revenue include those of Nnyanzi et al (2016), which analysed the impact of regional integration on tax revenue in the East African Community. The study found a negative and significant relationship between tax revenue and government effectiveness, rule of law and political stability.…”

Section: Empirical Literaturementioning

confidence: 99%

The Effect of the Quality of Governance on Tax Revenue in East Africa

Kahunde

Mukisa

Teera

2019

Tanzanian Economic Review

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The East African (EA) countries have run budget deficits for over a decade, implying that the amount of tax is low compared to what is required for the smooth-running of their economies. Although several studies have attempted to explore factors behind low tax revenues, these have overly concentrated on the supply side factors (sectoral contributions to GDP, GDP per capita, and inflation). Moreover, these studies have had conflicting results on the determinants of tax revenue. This study, therefore, seeksto investigate the effect of the quality of governance on the amount of tax revenue in the EA countries (1996 to 2016). The study employs the Panel Autoregressive Distributed Lag model as developed by Pesaran et al. (1999). Empirical evidence from the pooled mean group shows a positive long-run relationship among the variables, implying that an improvement in the quality of governance leads to a long-run increase in tax revenue. Therefore, long-run efforts to increase tax revenue in EA should focus on improvements in the quality of governance. However, the study finds a negative short-run relationship.

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“…Empirical studies on the determinants of tax revenue abound. One strand of the literature finds the level of income, per capita GDP, foreign aid, the share of agriculture, the economic structure, and the degree of openness to be statistically significant in explaining the variations in the revenue to GDP ratio across countries (Addison & Levin, 2012; Gupta, 2007; Nnyanzi, Babyenda, & Bbale, 2016; Zarra‐Nezhad, Ansari, & Moradi, 2016). Another strand of the empirical literature focuses on how institutional variables determine tax revenue.…”

Section: Introductionmentioning

confidence: 99%

Trade misinvoicing effects on tax revenue in sub‐Saharan Africa: The role of tax holidays and regulatory quality

Asmah

Andoh

Titriku

2020

Ann Public Coop Econ

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The first target of Goal 17 of the Sustainable Development Goal (SDG) emphasizes the need to strengthen domestic resource mobilization and improve revenue collection. However, the average tax-to-GDP ratio is much lower than the optimal threshold required to finance development. Meanwhile, Africa is losing a significant amount of its capital through illicit financial flows, primarily driven by trade misinvoicing, but at the same time offering fiscal incentives and improving governance to create an environment for increased domestic revenue. Using random and fixed effects models, the study examines the tax revenue effects of trade misinvoicing, and further examines the extent to which tax holidays and regulatory quality dilute or deepen the revenue effects of trade misinvoicing for 13 African countries over the period 2000 to 2015. The results suggest that trade misinvoicing reduces tax revenue. While tax holiday strengthens the effect of trade misinvoicing, regulatory quality dilutes the effect of trade misinvoicing on tax revenue. The study, therefore, recommends that the governments of SSA should promote good governance, reduce trade misinvoicing and review existing tax incentives as critical components of the ongoing

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Regional Economic Integration and Tax Revenue: East African Community

Cited by 17 publications

References 10 publications

Determinants of tax revenue in East African countries: An application of multivariate panel data cointegration analysis

Determinants of tax revenue in East African countries: An application of multivariate panel data cointegration analysis

The Effect of the Quality of Governance on Tax Revenue in East Africa

Trade misinvoicing effects on tax revenue in sub‐Saharan Africa: The role of tax holidays and regulatory quality

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