A Pooled Mean Group Estimation of Taxation and Economic Growth in Sub-Saharan Africa
- Post by: airjournals
- December 5, 2021
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The study investigates the impact of taxation on economic growth in Sub-Saharan Africa during the period 2000-2020 making use of annual panel data. The hypotheses were linearly modeled while adopting the pooled mean group estimation. Taxes on goods and services; taxes on income, profits, and capital gains; and taxes on international trade were the independent variables and gross domestic product (a proxy for economic growth) was the dependent variable. Findings reveal that taxes on goods and services have a negative and significant effect while taxes on income, profits, and capital gains; and taxes on international trade have a positive and insignificant effect on the economic growth of Sub-Saharan African countries in the long run. Given the positive but insignificant impact of taxes on income, profits, and capital gains; and taxes on international trade on economic growth, the study thus recommends that governments of Sub-Saharan African countries should reform the tax system and focus on expanding the tax base in order to increase the tax effort as well as improve efforts to eliminate fraud, tax evasion, corruption and improve the mechanisms for the collection of taxes.
Keywords: Taxation; Sub-Saharan Africa; Panel Cointegration; Pooled Mean Group
Egiyi, Modesta Amaka