Statistical analysis of the determinants of tax revenue performance in Uganda from 2001-2018
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Tax revenue is one of the means used by the government to finance its expenditure this is considered as the major source of government’s revenue in the country. Government finances its social services and economic development without affecting other economic variables, political and cultural issues. There are many sources of revenue for government such as printing money, collection of money through penalty and other means, but those solution leads to other problem. Contrary this, revenue that comes from tax revenue is best solution since it does not affect any social variables in the country. The research was carried out to understand the determinants of tax revenue performance in Uganda, a statistical analysis was conducted among the four determinants that is foreign direct investment, inflation rate, foreign aid and gross domestic product. A period of 18 years from 2001 to 2018 where data about FDI, inflation rate, foreign aid and gross domestic product were recorded was used for analysis. Data about tax revenue performance was collected from Uganda revenue authority, foreign direct investment, foreign aid and gross domestic product data was collected from Uganda bureau of statistics while data about inflation rate from bank of Uganda. Data analysis and data cleaning were done using both Microsoft Excel and Stata. Univariate, bivariate and multivariate analysis were included, multi variate analysis was done by fitting a linear regression model to analyze the determinants of tax revenue in Uganda. The study revealed that GDP and FDI have a strong positive impact on the revenue performance in the country meaning that an increase in GDP and FDI increases the revenue of the country while a decrease in these two leads to a decrease in tax revenue performance. A negative relationship was found out between tax revenue performance and the rest of the variables that is inflation rate and foreign aid. The study recommends that government should pay attention to domestic revenue mobilization rather than depending on outside sources of financing, use foreign aid as an addition source of income not as a main source since the government will fail incase aid stops, the research further recommends that government should work around to attract foreign direct investment as it does not only contribute to tax revenue performance but also creates jobs, develop local skilled labour and stimulate the transfer of new technology.