Track: Financial Engineering
Tax revenue collection is enchanted territory for many nations. The woes that governments face in trying to raise resources for service provision via tax revenue cannot be overemphasized. This study assesses the relationships between tax revenue mobilization and three of its predictors in Zambia. The three predictors are external debt, FDI inflows and copper prices. Public outcry about public debt, the quality of foreign investments and the fact that Zambia’s major export has historically been copper, make the three determinants important to study in this context. The study uniquely contributes to the role of prices of the country’s major export (copper) on its tax revenue. Data for tax revenue (as a percentage of GDP) was obtained from the Zambia Revenue Authority website. Secondary data for the predictors came from the world development index database for the years 1995 to 2019. The ARDL approach is used to model the long and short run relationships between tax revenue and its three determinants in this study. The study finds a positive long run relationship between external debt and tax revenue. Copper prices only had a positive long run relationship with tax revenue at the 10% significance level. The FDI inflows show no relationship with tax revenue in both the short and long run. External debt and copper prices both had positive significant short run relationships with tax revenue. The study makes several recommendations for policy makers, tax revenue collecting authorities and practitioners as well as for scholarship.