Abstract

In this study, we empirically test impact of taxation on long-run growth of a sample of 32 countries in sub-Saharan Africa. The results indicate a zero effect of taxation on long-run growth. Moreover, the results suggest a significant negative effect of indirect taxes and taxes on individuals in short term. Consequently, the use of taxation as an instrument of intervention is not appropriate in the region. The countries of the region could therefore increase their growth, if the design of fiscal policy rests solely on logic of fiscal neutrality.

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