The Analysis of Tax Buoyancy and Determinant in Sierra Leone

Özet

Tax revenue in Sierra Leone has been low throughout the study period (1988 to 2018). The ARDL bound testing co-integration estimation technique was employed. A log level multiple regression model that comprises buoyancy of total tax revenue as a dependent variable and percentage share of service value added, import, industry, money supply and agricultural sector were used as an independent variable. The result from the bound test confirms the existence of co-integration relation, which validates the estimation of long run and short run model. The long run empirical result suggests that agricultural sector, industry and service value added as a percentage share of GDP had a positive and statistically significant effect on the buoyancy of total tax revenue. Also, the results establish that import and money supply were insignificant at the conventional level in the long run. However, the short run result reveal that all the variables are statistically significant in the study period. Specifically, the short run results confirm a positive relationship between agricultural sector, money supply and the responsiveness of tax revenue. As the findings of the present study revealed, tax revenue there is a need for enhancing the efficiency of revenue administration in bring new customers in to the tax net.