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Influence of Exchange Rate on Collection of Tax Revenue in Tanzania Using VECM Analysis

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  • James Daniel Chindengwike

    (Philippine Christian University)

Abstract

Collection of tax revenue is very important to support the government’s plans. This paper examines how exchange rates affect collection of tax in Tanzania. This paper employed a time series methodology and quantitative research approach. The population of the study comprises the financial data for 30 years from 1993 to 2023. The study included 30 observations (year data) collected from trustworthy institutions such as the Word Bank (WB) and Tanzania Revenue Authority (TRA). Since the explanatory variables are cointegrated with tax revenue collection, the study’s findings found that exchange rates influence Tanzania’s tax revenue collection when trade openness is controllable variable. According to the analysis, there is association between exchange rates and collection of tax revenue and also the variables moving towards equilibrium and there is cointegration in long run term. The research recommended that in order for the government to boost the tax revenue collection also the government should formulate friendly laws and regulations.

Suggested Citation

  • James Daniel Chindengwike, 2024. "Influence of Exchange Rate on Collection of Tax Revenue in Tanzania Using VECM Analysis," EuroEconomica, Danubius University of Galati, issue 2(43), pages 41-52, November.
    • Handle: RePEc:dug:journl:y:2024:i:2:p:41-52
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