Nexus between per capita income and tax revenue generation in Tanzania: An VCM analysis

James Daniel Chindengwike

doi:10.51867/ajernet.7.3.30

Authors

James Daniel Chindengwike St. John's University of Tanzania, Dodoma, Tanzania https://orcid.org/0000-0002-1717-8759

DOI:

https://doi.org/10.51867/ajernet.7.3.30

Keywords:

Per Capita Income, Performance, Revenue Collection, Tax Revenue Generation, Tanzania

Abstract

The purpose of this study was to investigate how per capita income affects tax revenue collection. Theory of tax-level determinants employed in this study. The study employed a quantitative research methodology and a panel data research design, which comprised a number of panel data procedures such as cointegration and normality testing. Tanzania was represented via secondary data from two areas, totaling 200 observations. Vector Error Correction Model (VECM) was developed to look at long-term connections between variables. The data came from credible sources Tanzania Revenue Authority (TRA), Bank of Tanzania (BOT), National Bureau of Statistics (NBS), International Monetary Funds (IMF), and Word Bank (WB). The study's findings revealed a statistically significant association between per capita income and tax revenue generation in developing countries like Tanzania. According to the research, designing and implementing a more realistic tax framework that allows for monetary ties will improve revenue collection across nations. The government must provide a more favourable environment for overseas trade so that more of them may be undertaken, hence growing GDP. Changes in tax charges must also be regulated in order to increase the TZS pricing, which may have an influence on revenue collection.

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