Taxation And Economic Growth In Uganda

ABSTRACT

This research report set out to establish the relationship between Tax Rates and economic growth (measured by GDP) in Uganda (2000-2010). The objectives of the study were; to establish the trend of Tax Rates in Uganda(2000-2010), to establish the trend of GDP growth rate of Uganda(2000-20 10) ,to investigate the relationship between Tax Rates and GDP growth in Uganda (2000-20 10). The study employed time series analysis such Correlation analysis, regression analysis mechanisms. The trend of Tax Rates had shown a general increase and GDP growth rate had shown a cyclical fluctuation for the period under study. A sample size of ten years was used(2000-2010), The data analysed was got from World bank and international monitory fund (IMF) for the period 2000-2010. Using the correlation, regression approach, there was a weak positive correlation between Tax Rates and GDP growth(r0.3234), there was also no relationship between Tax Rates and GDP growth at 0.05 level of significance. In conclusion, there is no relationship between Tax Rates and growth rate in Uganda which agreed with Wayne (1 992), Blanker et al (2005), who carried out.study on Tax Rates and GDP growth rate and found no relationship .This implies that the tax play a small role in economic growth of Uganda. The researcher recommends the government to implement tax policies, which favors every one; this can encourage people to invest since investment is the source of economic growth. On the economic growth issues the researcher recommends the strengthening of existing policies in connection to economic growth such as export promotion policies, import substitution policies, market expansion and infrastructure. This will help to regulate on Economic growt