TAX REVENUE AND ECONOMIC DEVELOPMENT IN SUB-SAHARAN AFRICAN COUNTRIES

Abstract

Developing countries in Africa, especially Sub-Sahara countries have focus on using tax revenue as a source of economic development. This study investigated the impact of tax revenue on economic development in sub-Saharan African countries by focusing on 4 sub-Saharan African countries from 2017 to 2023. Data was collected through the central banks economic report and World Development Indicators (WDI). Collected The data were quarterly data which were collected for period the data were made available from the selected countries and data were examined through cointegration regression. The results indicated that income tax exerts a negative effect on economic development of Ghana (t-statistic: -0.0740, p-value<0.05), Kenya (t-statistic: -0.0077, p-value>0.05) and Tanzania (t-statistic: -0.0315, p-value<0.05), but has a positive impact on that of Nigeria, although similar to the other countries, has no long-term effect on economic development. Similarly, the results indicate that Value Added Tax adversely affects economic development in Ghana and Kenya, while it contributes positively in Tanzania and Nigeria. Customs and Excise Duties, on the other hand, positively influence economic development in Ghana and Kenya but has a negative effect in Nigeria and Tanzania. The study concludes that tax payment has improve economic development in Sub-Sahara Africa countries. This study recommends the African government to improve their tax administration and implementation by ensuring timing payment of tax by the tax payer.