The impact of macroeconomic and social variables on income and consumption tax revenues: a case of Zimbabwe
This paper investigates the macroeconomic and social determinants of income and consumption tax revenues in Zimbabwe, a country grappling with chronic fiscal instability, elevated debt and a large shadow economy. Leveraging annual data from 1980 to 2022, the analysis employs the Autoregressive Distr...
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| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Taylor & Francis Group
2025-12-01
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| Series: | Cogent Economics & Finance |
| Subjects: | |
| Online Access: | https://www.tandfonline.com/doi/10.1080/23322039.2025.2506700 |
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| Summary: | This paper investigates the macroeconomic and social determinants of income and consumption tax revenues in Zimbabwe, a country grappling with chronic fiscal instability, elevated debt and a large shadow economy. Leveraging annual data from 1980 to 2022, the analysis employs the Autoregressive Distributed Lag bounds-testing methodology to model both long-run equilibria and short-run adjustments. Distinct from prior research, this study disaggregates income and consumption tax revenues, thereby exposing unique, policy-relevant dynamics across tax categories. Core macroeconomic variables include gross domestic product growth, private consumption, inflation, foreign direct investment, real interest rates, trade openness, informality, agricultural output and demographic trends. Results reveal that private consumption, agricultural output, inflation and real interest rates exert statistically significant effects on tax revenues. In particular, growth in consumption and agriculture enhances revenues, while inflation and high real interest rates erode the tax base. This research contributes novel insights by isolating tax-specific macroeconomic effects, contesting the prevailing assumption of uniform tax determinants. The findings provide crucial guidance for fiscal policy design aimed at strengthening revenue mobilisation and economic resilience amid persistent macroeconomic volatility. |
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| ISSN: | 2332-2039 |