Macroeconomic Determinants of Tax Revenues of South African Countries

Abstract

This research explores the macroeconomic elements that impact tax income in countries in South Africa. The study considers five countries: Namibia, Botswana, Zimbabwe, South Africa, and Zambia. Its primary objective is to identify key factors influencing tax revenue in these nations and examine their economic impact. Employing multivariate regression analysis, the research evaluates the impact of various macroeconomic indicators, including economic growth, inflation, foreign direct investment, and trade openness on tax revenues, using data from 1990 to 2021. Results indicate that economic growth and trade openness positively influence tax revenue, while inflation adversely affects it. The impact of foreign direct investment on tax revenue varies by country. These findings carry significant policy implications for South African nations, highlighting the importance of focusing on trade liberalization and economic growth to boost tax revenues, while also controlling inflation.