Company income tax revenue and economic growth: empirical evidence from Sub-Sahara countries in Africa

Abstract

The development level of any country depends on the volume of revenue realised for the infrastructure
provisions. For decades ago, local resource mobilization issue has enticed significant attention in
Sub-Sahara countries in Africa due to paucity of income generated. The aim of this study is to examine
the effect of CIT revenue on the growth of Sub-Sahara counties in Africa. Data from ten Sub-Sahara
countries which comprised of Nigeria, Liberia, Sierra Leon, Ghana, South Africa, Senegal, Benin, Burkina-
Faso, Guinea and Mali were employed from year 2000 to 2019. However, the data were sourced
majorly from World Development Indicator (WDI) and analyzed using Panel data analysis and ARDL.
Based on our findings, the Coefficients of all the variables, especially CIT are negative and insignificant,
this goes to validate the speed of adjustment of 1.8% (coefficient of -1.86124), meaning that 1% change
in CIT absolutely bring down GDP by 1.8% in the long run but in the short run, 1% change in CIT logically
bring down GDP by 0.5% (coefficient of 0.596384). Conclusively, company income tax revenue
negatively affected the growth of Sub-Sahara countries in Africa over the period of study both in the short
and long run. It is recommended that fiscal authorities of respective countries should create database
mechanism which will expose annual chargeable profit and tax payable for each company in order to
eschew CIT evasion in the country. Regulatory authorities saddled with the monopolistic responsibility
of tax collection should be empowered to impose compliance on CIT payers which will upsurge CIT
revenue enormously. Lastly, CIT tax collected should be appropriately dispersed to breed growth of
economy for effective compliance of taxpayers.
Key words: Sub-Sahara, Countries, CIT, Growth, ARDL, Revenue.