Title:
Gross Domestic Product (GDP) determinant of Direct and Indirect Tax Revenue Collection in Tanzania

Authors:
Heriel E. Nguvava and Sophia Kayombo Kadenge, Tanzania

Abstract:

This study assessed Gross Domestic Product as a determinant of both direct and indirect tax revenue collection in Tanzania. The study adopted positivism paradigm, quantitative approach and longitudinal strategy. Only secondary data was used, the data (GDP, Total Tax Revenue collection, Direct and Indirect tax collections) was collected from Tanzania revenue Authority and Bank of Tanzania for the period covering 2013 to 2022. The study employed correlation and ordinary least square methods to test the relationship and causality of Independent and Dependent Variables. The result revealed that Gross domestic product has significant and positive relationship with total tax revenue collection in Tanzania whereby a unit increase of GDP lead to increase in 4.6508 units of total tax revenue collected. Further, current study findings revealed that GDP in Tanzania significantly and positively affect tax revenue collection from both direct and indirect sources whereby a unit increase in GDP lead to increase in 1.4508 units of tax revenue and 3.2008 units of tax revenue respectively.  This study recommends that, the government of Tanzania should develop and implement policies aimed at increasing economic growth in order to enhance tax revenue generation.  Also, the country should set prudent macroeconomic policy and environment which necessitate economic integrations among different sectors, mobilizes domestic resources and improve trade policies to make country growth sustainable on the basis of domestic resource mobilizations. The cumulative effects lead to improved tax revenue collection of the country.

DOI: https://doi.org/10.51505/IJEBMR.2024.81206