Regional Economic Integration and Tax Revenue: East African Community

John Bosco Nnyanzi (), Peter Babyenda () and John Mayanja Bbale ()
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Peter Babyenda: Makerere University, Jinja Campus, Postal: P.O Box 11339,Kampala, Uganda
John Mayanja Bbale: Makerere University, Kampala, Postal: P.O Box 11339,Kampala, Uganda

Journal of Economic Integration, 2016, vol. 31, issue 4, 932-967

Abstract: The ultimate goal of regional integration is the long-term high economic growth for member states. Tax revenues are critical to achieving this objective, given the high dependence of developing countries on this fiscal revenue. However, empirical studies have been unable to determine whether regional integration improves or impedes the mobilization of taxes. We use data from 1980 to 2014 in order to estimate a tax model; the results based on the generalized method of moments technique reveal that East African regional integration has had a significant impact on tax revenue owing to the presence of good institutions. We advocate any policy agenda aimed at improving institutional environment, financial sector, macroeconomic stability, and manufacturing and trade, as well as a well-integrated approach to reduce a shadow economy. Finally, given the deleterious nature of capital account liberalization, we believe that cautiously designed capital control policies are likely to enhance tax collections in East Africa.

Keywords: Tax revenue; Regional Integration; Institutional Quality; Capital account liberalization; Shadow economy; East African Community (search for similar items in EconPapers)
JEL-codes: E26 E62 F15 O11 O17 O55 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0703

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