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Tax Revenue and Economic Growth in Selected ECOWAS Countries, Evidence from Sure Model

Joshua Ose Oboh (), Okafor Joan Chinonyelum () and Richardson Kojo Edeme ()

International Journal of Academic Research in Accounting, Finance and Management Sciences, 2018, vol. 8, issue 3, 310-324

Abstract: The need for African countries to improve tax revenue-GDP ratio has open up debate among policy makers. This study is motivated to analyse the impact of tax revenue, direct and indirect tax on economic growth of ECOWAS countries, using Seemingly Unrelated Regression Estimate (SURE) analysis for five selected Economic Community of West African States (Nigeria, Ghana, Sierra Leone, Benin and Burkina Faso) using data from 2000-2015 generated from World Bank World Development Indicators, 2016. Findings reveal that total tax revenue has positive and significant effect on economic growth an increase in total tax revenue by $1 causes economic growth by 43.2 percent while an increase in direct tax revenue by the same amount dampens growth by -3.08 percent, an indication that direct tax is unproductive in the countries of study. Also an increase in indirect tax revenue by $1 led to a corresponding increase in economic growth by 47.7 percent. For those countries where indirect tax are unproductive, there is need to broaden indirect tax base instead of direct tax rate.

Keywords: Tax Revenue; Direct Tax, Indirect Tax, Economic Growth; ECOWAS; Seemingly Unrelated Regression Estimate Analysis (search for similar items in EconPapers)
Date: 2018
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