Revenue Productivity of the Tax System in Namibia: Tax Buoyancy Estimation Approach
Abstract
Buoyancy refers to how tax revenue responds to a gross domestic product without correcting for discretionary alterations in the tax system. The paper assessed the buoyancy of Namibia’s overall tax system in an attempt to measure the response of the tax system in entirety because of fluctuations in the national income and/or the deliberate act by the government to increase tax rate, reviewed tax code and tax machinery etc. The study employed the Engle-Granger approach to the error correction model to estimate the tax buoyancy for the period 2001 to 2014. The empirical findings from the study revealed that overall the Namibian tax system is income inelastic and not buoyant. This is confirmed by a low and negative value of 0.036 which is less than unit. Thus, the economy is not generating sufficient revenue both through discretionary tax measure and through the expansion in the economic activities. Therefore, the government need to introduce measures that will allow for more tax revenue collection to have a stable revenue base. This also means the government need to keep track of tax mobilization with growth in the gross domestic product as well as to ascertain taxes that are productive.
Downloads
References
Asteriou, D. & Hall, S. G. (2009). Applied Econometrics: A Modern Approach. Revised Edition. Palgrave Macmillan.
Bank of Namibia. (2015). Annual Report. Windhoek.
Bank of Namibia. (2016). Annual Report. Windhoek.
Bilquees, F. (2004). Elasticity and Buoyancy of the Tax system in Pakistan. The Pakistan Development Review, 4(3), 73-93.
Bonga, G. W., Dhoro-Gwaendepi, N. L. & Mawire-Van Strien, F. (2015). Tax Elasticity, Buoyancy and Stability in Zimbabwe. IOSR Journal of Economics and Finance, 6(1), 21-29.
Botlhole, T. D. & Agiobenebo, T. J. (2006). The Elasticity and Buoyancy of the Botswana Tax System and their Determinants. The IUP Journal of Financial Economics, 4(4), 48-62.
Edeme, R. K., Nkalu, C. N., Azu, B. & Nwachukwu, S. C. (2016). Alternative Specification and Estimation of Tax Revenue-Gross Domestic Product Relationship. Asian Journal of Economic Modelling, 4(3), 134-141.
Gituku, F. C. (2011). Tax Reforms and Revenue Productivity in Kenya. Doctoral dissertation, University of Nairobi.
Gujarati, D. N. (1995). Basic Econometrics. New York: McGraw-Hill.
Kusi, N. K. (1998). Tax Reform and Revenue Productivity in Ghana. Research Paper, 74.
Mandela, B. & Olukuru, J. (2015). Tax buoyancy: A Comparative Study between Kenya and South Africa. Strathmore University, Nairobi, Kenya.
Mawia, M. & Nzomoi, J. (2013). An Empirical Investigation of Tax Buoyancy in Kenya. African Journal of Business Management, 7(40), 4233-4246.
Meshak, I. (2014). The Productivity of the Nigeria Tax System. Canadian Open Accounting and Taxation Journal, 1(1), 1-11.
Mukarram, F. (2001). Elasticity and Buoyancy of Major Taxes in Pakistan. Pakistan Economic and Social Review, 2(3) 75-86.
Ndedzu, D., Macheka, A., Ithiel, M. M. & Zivengwa, T. (2013). Revenue Productivity of Zimbabwe’s Tax System. Asian Journal of Social Sciences & Humanities, 2(4), 144-156.
Osoro, N. E. (1993). Revenue Productivity Implications of Tax Reform in Tanzania. African Economic Research Consortium Research Paper No. 20.
Samwel, K. C. & Isaac, M. K. (2012). Elasticity and Buoyancy of Tax Components and Tax Systems in Kenya. Research Journal of Finance and Accounting, 3(5), 205-231.
Singer, N. M. (1968). The Use of Dummy Variables in Estimating the Income-Elasticity of State Income-Tax Revenues. National Tax Journal, 21(2), 200-204.
Timsina, N. (2007). Tax Elasticity and Buoyancy in Nepal: A Revisit. NRB Economic Review, 19, 9-21.
Tegegn, T. (2008). The Productivity of Tax System in Ethiopia (1961-2005). Master’s thesis, Addis Ababa University, Addis Ababa.
Twerefou, D. K., Fumey, A., Assibey, E. O. & Asmah, E. E. (2010). Buoyancy and Elasticity of Tax: Evidence from Ghana. West Africa Journal Monetary Economic Integration, 10(2), 36-70.
Wanjiku, N. J. (1993). Tax Productivity of Kenya Tax Reform. Master’s thesis, University of Nairobi, Nairobi.
Copyright (c) 2019 A Shikongo, A Shikongo, O Kakujaha-Matundu, T Kaulihowa
This work is licensed under a Creative Commons Attribution 4.0 International License.
Author (s) should affirm that the material has not been published previously. It has not been submitted and it is not under consideration by any other journal. At the same time author (s) need to execute a publication permission agreement to assume the responsibility of the submitted content and any omissions and errors therein. After submission of a revised paper in the light of suggestions of the reviewers, editorial team edits and formats manuscripts to bring uniformity and standardization in published material.
This work will be licensed under Creative Commons Attribution 4.0 International (CC BY 4.0) and under condition of the license, users are free to read, copy, remix, transform, redistribute, download, print, search or link to the full texts of articles and even build upon their work as long as they credit the author for the original work. Moreover, as per journal policy author (s) hold and retain copyrights without any restrictions.
