Moderating effect of Corruption on the Nexus between Tax Revenue and Human Development Index of West African Commonwealth Countries

Silvia Nwakaego Onyekachi
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Silvia Nwakaego Onyekachi: Department of Accounting, Michael Okpara University of Agriculture, Umudike, Nigeria. onyekachi.silvia@mouau.edu.ng

Journal of Taxation and Economic Development, 2025, vol. 24, issue 2, 68-87

Abstract: Effective tax administration should generate substantial revenue for the government and contribute to economic development except when disrupted by factors such as corruption. This study explored the disruptive role of corruption in weakening the link between tax revenue and human development index (HDI) in West African Commonwealth countries. Built upon the altruistic behavior theory of taxation, the study argued that the conversion of tax revenue to human development can encourage greater tax compliance in developing economies such as The Gambia, Ghana, Nigeria and Sierra Leone. Secondary data on tax revenue, human development index, corruption perception index and four control variables were collected from 2003 to 2022. Based on the outcomes of the preliminary diagnostics analysis, Westerlund co-integration and panel fixed effect regression with Driscoll-Kraay standard errors was estimated for the long-run relationships and short-run dynamics respectively. Findings suggested absence of significant long-run relationships as the group and panel statistics yielded probabilities of above 5%, but tax revenue had significant effect on the HDI of the sampled countries in the short run. In addition, corruption was found to have significant negative interaction on the link between tax revenue and HDI. Therefore, the study concluded that corruption is a major impediment to the growth and development of West African commonwealth nations which must be urgently addressed to enhance the region’s progress. It was recommended that the region should tackle corruption decisively to boost government revenue through taxation, and ensure effective channeling of economic resources to development instead of increasing tax rates

Keywords: tax revenue; human development; corruption; West Africa; tax compliance (search for similar items in EconPapers)
Date: 2025
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