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Impact of taxation on growth in Subsaharan Africa: new evidence based on a new data set

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  • GBATO, ANDRE

Abstract

In this study, we empirically test the impact of taxation on the long-term growth of a sample of 32 countries in sub-Saharan Africa. The results indicate a zero effect of taxation on long-term growth. Moreover, the results suggest a significant negative effect of indirect taxes and taxes on individuals in short term. Consequently, the use of taxation as an instrument of intervention is not appropriate in the region. The countries of the region could therefore increase their growth, if the design of fiscal policy rests solely on logic of fiscal neutrality.

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  • Gbato, Andre, 2017. "Impact of taxation on growth in Subsaharan Africa: new evidence based on a new data set," MPRA Paper 80903, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:80903
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    References listed on IDEAS

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    1. Donatella Baiardi & Paola Profeta & Riccardo Puglisi & Simona Scabrosetti, 2019. "Tax policy and economic growth: does it really matter?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(2), pages 282-316, April.
    2. Chudik, Alexander & Pesaran, M. Hashem, 2015. "Common correlated effects estimation of heterogeneous dynamic panel data models with weakly exogenous regressors," Journal of Econometrics, Elsevier, vol. 188(2), pages 393-420.
    3. Markus Eberhardt & Andrea Filippo Presbitero, 2013. "This Time They're Different: Heterogeneity;and Nonlinearity in the Relationship;between Debt and Growth," Mo.Fi.R. Working Papers 92, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    4. Jens Matthias Arnold, 2008. "Do Tax Structures Affect Aggregate Economic Growth?: Empirical Evidence from a Panel of OECD Countries," OECD Economics Department Working Papers 643, OECD Publishing.
    5. Giampaolo Arachi & Valeria Bucci & Alessandra Casarico, 2015. "Tax structure and macroeconomic performance," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(4), pages 635-662, August.
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    1. Andre Gbato & Falapalaki Lemou & Jean-François Brun, 2021. "Effectiveness of SARA reform in sub-Saharan Africa [Efficacité de la réforme des SARA en Afrique subsaharienne]," Working Papers hal-03119001, HAL.
    2. Chiad, Faycal, 2022. "أثر الضرائب على الاستثمار والنمو الاقتصادي في الدول العربية: دراسة تحليلية قياسية [The impact of taxes on investment and economic growth in the Arab countries: Analytical and Econometric Study]," MPRA Paper 114425, University Library of Munich, Germany.
    3. Yaru, Mohammed Aminu & Adisa-Ohiaka, Ubaydah, 2022. "Indirect Taxation and Poverty in Sub-Saharan Africa: An Empirical Evidence from Panel Data Analysis," African Journal of Economic Review, African Journal of Economic Review, vol. 10(5), December.
    4. John MacCarthy & Paul Muda & Prince Sunu, 2022. "Tax Revenue and Economic Growth Nexus in Ghana: Co-integration and Granger causality Test," Bulletin of Applied Economics, Risk Market Journals, vol. 9(2), pages 15-35.
    5. Andrey A. Pugachev, 2023. "Assessment of the Impact of Social Tax Deductions for Personal Income Tax on the Welfare and Inequality of Citizens in Russia," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 22(4), pages 789-813.

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    More about this item

    Keywords

    Growth; Taxation; Heterogeneous panels; Cross-sectional dependence;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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