Tax and income inequality: evidence from Sub-Saharan Africa

Theodora Aba Kwegyeba Brown, Godfred A. Bokpin and Emmanuel Sarpong-Kumankoma

International Journal of Development Issues, 2023, vol. 22, issue 3, 345-360

Abstract: Purpose - This study aims to determine how taxes can be used to bridge income inequality gap in sub-Saharan Africa (SSA). Design/methodology/approach - A panel data set of 36 SSA countries was analysed using generalised method of moments. Findings - The results suggest that an increase in direct taxes relative to indirect taxes has a positive significant impact on income inequality. This is mostly due to the progressive nature of direct taxes as compared to indirect taxes. Originality/value - This research contributes to the scant literature on how specific tax components affect income inequality, especially in developing countries.

Keywords: Income inequality; Direct taxes; Indirect taxes; Tax structure; D3; D63 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijdipp:ijdi-12-2022-0277

DOI: 10.1108/IJDI-12-2022-0277

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