Effect of sectoral expenditures on tax-to-GDP ratio in Uganda
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The main purpose of this study is to determine the effect of sectoral expenditures on tax to GDP ratio. In specific, the study intended to determine the effect of sectoral spending (such as agriculture, education, security, social development, parliament, local government programmes and interest payments) on tax to GDP ratio. The tax data was obtained from the Ministry of Finance, Planning and Economic. Development data portal while the data on monthly rebased GDP was downloaded from the Uganda Bureau of Statistics website (UBOS). This study employed a multiple linear regression model of the OLS method to estimate the impact of sectoral expenditure on tax to GDP ratio. According to the findings of this study, government spending has a significant impact on the tax to GDP ratio when it is linked to the level of economic activity in the Ugandan economy. Interest payments, in particular, relieve future generations of debts, raising the level of economic activity and thus the tax-to-GDP ratio. Furthermore, agricultural spending is interconnected with many other sectors of the economy, which accelerates the level of economic activity and thus raises Uganda's tax-to-GDP ratio. When there is a fair judicial system, the economy has guaranteed security and lowers crime rates, which boosts economic activity and raises the tax to GDP ratio.