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Tax Revenue Effects of Sectoral Growth and Public Expenditure in Uganda

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  • Mawejje, Joseph
  • Munyambonera, Ezra

Abstract

This paper contributes to a growing strand of literature on the determinants of tax revenue performance in developing countries, particularly in Sub-Saharan Africa. More specifically we estimate the tax elasticities of sectoral output growth and public expenditure. The unique features of this paper are twofold: First we develop a simple analytical model for tax revenue performance taking into account some structural features pervasive in most developing countries with large informal sectors. Second we test the model predictions on Ugandan time series data using ARDL bounds testing techniques. Results indicate that dominance of the agricultural and informal sectors pose the largest impediments to tax revenue performance. In addition development expenditures, trade openness, and industrial sector growth are positively associated with tax revenue performance. We propose policies to support the development of value added linkages between agricultural and industrial sectors while emphasizing the need to unlock the potentially large contributions of the informal sector with a view of widening the tax base.

Suggested Citation

  • Mawejje, Joseph & Munyambonera, Ezra, 2016. "Tax Revenue Effects of Sectoral Growth and Public Expenditure in Uganda," Research Series 234555, Economic Policy Research Centre (EPRC).
    • Handle: RePEc:ags:eprcrs:234555
    DOI: 10.22004/ag.econ.234555
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    File URL: https://ageconsearch.umn.edu/record/234555/files/125%20Tax%20Revenue%20Effects%20of%20Sectoral%20Growth%20and%20Public%20Expenditure%20in%20Uganda.pdf
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    Citations

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    Cited by:

    1. Mawejje, Joseph & Sebudde, Rachel K., 2019. "Tax revenue potential and effort: Worldwide estimates using a new dataset," Economic Analysis and Policy, Elsevier, vol. 63(C), pages 119-129.
    2. Mawejje, Joseph, 2019. "Natural resources governance and tax revenue mobilization in sub saharan Africa: The role of EITI," Resources Policy, Elsevier, vol. 62(C), pages 176-183.
    3. Tran, My Thi Ha, 2021. "Public Sector Management And Corruption In Asean Plus Six," OSF Preprints stxw4, Center for Open Science.
    4. Cordelia Onyinyechi Omodero, 2020. "Taxation Income, Graft and Informal Sector Operations in Nigeria in Relation to Other African Countries," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(2), pages 163-172, April.
    5. 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.
    6. Khezri, Mohsen & Heshmati, Almas & Ghazal, Reza & Khodaei, Mehdi, 2022. "Non-resource revenues and the resource curse in different institutional structures: The DIGNAR-MTFF model," Resources Policy, Elsevier, vol. 79(C).
    7. Mawejje Joseph & Odhiambo Nicholas M., 2020. "Fiscal Reforms and Deficits in Tanzania: An Exploratory Review," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 30(1), pages 57-75, March.
    8. Joseph Mawejje & Nicholas M. Odhiambo, 2021. "Uganda's fiscal policy reforms: What have we learned?," Public Budgeting & Finance, Wiley Blackwell, vol. 41(2), pages 89-107, June.
    9. Mawejje, Joseph & Munyambonera, Ezra, 2017. "Financing Infrastructure Development In Uganda," Research Series 253562, Economic Policy Research Centre (EPRC).
    10. Omodero Cordelia Onyinyechi, 2019. "The Consequences of Shadow Economy and Corruption on Tax Revenue Performance in Nigeria," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 29(3), pages 64-79, September.
    11. Milly Chepkorir Chebochok & Nimonka Bayale, 2023. "Effects of financial inclusion on tax revenue mobilization: Evidence from WAEMU countries," African Development Review, African Development Bank, vol. 35(2), pages 226-238, June.
    12. Manamba Epaphra & Lucas E. Kaaya, 2020. "Tax Revenue Effect of Sectoral Growth and Public Expenditure in Tanzania: An application of Autoregressive Distributed Lag Model," Romanian Economic Business Review, Romanian-American University, vol. 15(3), pages 81-120, September.
    13. Bruno Emmanuel Ongo Nkoa & Jacques Simon Song, 2022. "Les canaux de transmission des effets des TIC sur la mobilisation des recettes fiscales en Afrique," African Development Review, African Development Bank, vol. 34(S1), pages 80-101, July.

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