Intervening Role of the Poverty Level on Public Health Care and Tax Revenues Linkage: Evidence from the East Africa Community Members Countries

Universal Health Coverage (UHC) has dominated government and development partners’ boardrooms in the last two decades and will continue to do so in the foreseeable future. Debate is ongoing as to whether governments allocate additional public funds to health care as a result of expanded tax revenues or whether public health financing (PHF) can be harnessed to spur growth in tax revenues. Evidence from prior studies has varied, mainly stemming from differences in models adopted, choice and measurement of variables, as well as contextual disparities. The study was premised on a peacock-wiseman theory of public spending and the ability to pay theory of taxation. We explored the intervening effect of the Poverty Level (PL) on the PHF-tax revenue relationship. The study employed fiscal allocation and spending proportion to total government spending to measure public healthcare financing; poverty index to operationalize poverty level and total tax revenues as proxied by the sum of VAT, PAYE, and corporation tax as an indicator of tax revenues across three East Africa Community (EAC) Member countries. A research hypothesis was tested on a population of three EACs. Preliminary descriptive tests were conducted on mean, skewness kurtosis, and correlation. For hypotheses tests, simple linear regression was run to test PHF-tax revenue linkage; hierarchical multiple regression was used to test for intervention. Secondary data for all countries was available for all years under study. Findings were as follows: there was a statistically significant link between PHF and Tax revenues for EAC, Kenya, and Tanzania; there was the intervening effect of PL on the relationship between PHF and Tax revenues in Kenya only. Health, budgetary, and finance sectors and other agencies in the government can use the findings to guide healthcare allocations, particularly when setting goals to expand tax revenues.