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Revenue Productivity of the Tax System in Namibia: Tax Buoyancy Estimation Approach

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  • A Shikongo
  • A Shikongo
  • O Kakujaha-Matundu
  • T Kaulihowa

Abstract

Buoyancy refers to how tax revenue responds to a gross domestic product without correcting for discretionary alterations in the tax system. The paper assessed the buoyancy of Namibia’s overall tax system in an attempt to measure the response of the tax system in entirety because of fluctuations in the national income and/or the deliberate act by the government to increase tax rate, reviewed tax code and tax machinery etc. The study employed the Engle-Granger approach to the error correction model to estimate the tax buoyancy for the period 2001 to 2014. The empirical findings from the study revealed that overall the Namibian tax system is income inelastic and not buoyant. This is confirmed by a low and negative value of 0.036 which is less than unit. Thus, the economy is not generating sufficient revenue both through discretionary tax measure and through the expansion in the economic activities. Therefore, the government need to introduce measures that will allow for more tax revenue collection to have a stable revenue base. This also means the government need to keep track of tax mobilization with growth in the gross domestic product as well as to ascertain taxes that are productive.

Suggested Citation

  • A Shikongo & A Shikongo & O Kakujaha-Matundu & T Kaulihowa, 2019. "Revenue Productivity of the Tax System in Namibia: Tax Buoyancy Estimation Approach," Journal of Economics and Behavioral Studies, AMH International, vol. 11(2), pages 112-119.
  • Handle: RePEc:rnd:arjebs:v:11:y:2019:i:2:p:112-119
    DOI: 10.22610/jebs.v11i2(J).2826
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    References listed on IDEAS

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    1. Thuto D Botlhole & Tamunopriye J Agiobenebo, 2006. "The Elasticity And Buoyancy Of The Botswana Tax System And Their Determinants," The IUP Journal of Financial Economics, IUP Publications, vol. 0(4), pages 48-62, December.
    2. Richardson Kojo Edeme & Chigozie Nelson Nkalu & Benedict Azu & Sylvernus Chinedu Nwachukwu, 2016. "Alternative Specification and Estimation of Tax Revenue-Gross Domestic Product Relationship," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 4(3), pages 134-141.
    3. Kusi, N.K., 1998. "Tax Reform and Revenue Productivity in Ghana," Papers 74, African Economic Research Consortium.
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    5. Faiz Bilquees, 2004. "Elasticity and Buoyancy of the Tax System in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(1), pages 73-93.
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    7. Neelam Timsina, 2007. "Tax Elasticity and Buoyancy in Nepal: A Revisit," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 19, pages 9-21, April.
    8. Richardson Kojo Edeme & Chigozie Nelson Nkalu & Benedict Azu & Sylvernus Chinedu Nwachukwu, 2016. "Alternative Specification and Estimation of Tax Revenue-Gross Domestic Product Relationship," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 4(3), pages 134-141, September.
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    Cited by:

    1. Sanjeev Gupta & João Tovar Jalles & Jianhong Liu, 2022. "Tax Buoyancy in Sub-Saharan Africa and its Determinants," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(4), pages 890-921, August.

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