Macroeconomic determinants of tax revenue growth in Uganda (1985 - 2019)

Abstract

Tax revenue growth in Uganda has been low for the period 1985- 2019. Tax revenue growth in Uganda has also been below the average of sub-Saharan African countries. The main objective of this study is to empirically examine the macroeconomic determinants of tax revenue growth in Uganda for the period ranging from 1985-2019, using the Auto Regressive Distributed Lag (ARDL) approach. The result revealed that in the long-run GDP growth statistically affects Tax revenue growth while interest rate exerted a negative and significant influence. Whereas, in the short run imports have a positive effect on tax revenue growth in Uganda. Finally, the study recommends measures such as lowering interest rates, ensure increase in final expenditure of individuals to increase personal consumption, ensuring efficiency in policies that increase imports such as reduction of import quotas, licensing requirements.