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VOL. 7, ISSUE 4 (2025)
Estimating and comparing tax efforts among selected East African Community member States
Authors
Patrick Mwanza Nzula, James Murunga, David Musimbi
Abstract
The East African countries tax ratio is less than internationally
recognized level of 20 percent of Gross Domestic Product (GDP). This makes it
difficult for the region to realize the intended development projects. To boost
tax performance, the study sought to identify the determinants of tax ratio to
GDP among selected East African countries. The study also investigates tax
effort of the selected countries in the region. To achieve this, the study uses
a pragmatic fixed effects-based approach to approximate the decomposition of
inefficiency. The results show that GDP per capita, manufacturing share in GDP,
broad money share in GDP. The results also reveal that Kenya, Uganda, Tanzania,
Burundi and Rwanda have a tax effort of less than unit. Rwanda and Kenya are
found to have a tax effort of 0.98 and 0.97 respectively. Burundi is found to
have a tax effort of 0.95. Uganda and Tanzania have a tax effort of 0.88 and
0.81 respectively. Based on these findings the study recommends that East
African governments should promote the manufacturing growth and formalizing the
sector through industrial parks, special economic zones and simplify the tax
regimes for the small-scale manufacturers. The governments should digitalize
tax systems fully in order to reduce tax evasion, leakages and transaction
costs. The digitalization can be in form of e-filing, mobile tax payment and
e-invoicing.
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Pages:11-15
How to cite this article:
Patrick Mwanza Nzula, James Murunga, David Musimbi "Estimating and comparing tax efforts among selected East African Community member States". International Journal of Finance and Commerce, Vol 7, Issue 4, 2025, Pages 11-15
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