Evaluation of the Nexus between Indirect Tax Revenue and Economic Performance of West African Commonwealth Countries

Abstract

This study evaluates the impact of indirect tax revenue on the economic performance of West African Commonwealth countries: Ghana, Nigeria, Sierra Leone, and The Gambia. The study employed GDP growth rate and per capita income as measures of economic performance. Data on indirect tax revenues and measurement of economic performance were obtained electronically from the websites of the International Center for Tax and Development and the World Bank. The study employed ordinary least squares regression and found that indirect taxes have a positive and significant impact on both GDP growth rates and per capita income in West African Commonwealth countries. The study concludes that indirect tax revenue is relevant for improving the economic performance of West African Commonwealth countries. The study therefore recommends that tax administration in these countries should focus more on increasing tax revenue through indirect taxes, which are difficult to evade, and that mechanisms to enhance accountability within the system should be put in place.