East African Community (EAC) And Uganda’s Tax Revenue

Abstract

The aim of this paper is to empirically examine the effect of East African Community (EAC) on Uganda’s tax revenue and to explore other determinants of Uganda’s tax revenue using secondary time series data from 1980 to 2011obtained from World Bank indicators and previous research publications. The paper utilizes Augmented Dickey-Fuller (ADF), Philip-Perron (PP), Johansen Co- integration procedure and Error Correction models. We find that the EAC integration has no significant effect on Uganda’s tax revenue while manufacturing and Openness of the economy positively influence the Uganda’s tax revenue and inflation and agriculture negatively affects Uganda’s tax revenue. The degree of monetization of the economy does not significantly influence Uganda’s tax revenue. The study recommends that the government of Uganda should reform its tax system in order to match with the EAC integration and that more efforts should be place in the manufacturing sector, macro-economic stability, Expansion of export sector, commercialization and modernization of the Agricultural sector if Uganda is to increase its tax revenue generations.

Keywords: Uganda’s tax revenue, East African Community (EAC) integration, Manufacturing, Inflation, Openness