THE BUOYANCY AND ELASTICITY OF THE TANZANIAN TAX STRUCTURE, 1969/70 TO 1980/81.

摘要

In recent years, the share of government current services in developing countries has been increasing due to pressures for increased provision for social services. To keep pace with this trend, public revenues must grow at the same rate as public expenditures. The major sources of public revenue consist of: (1) internal borrowing from the public, (2) taxation, (3) borrowing from the banking system (credit creation), and (4) foreign loans and grants. In view of the problems inherent in these sources, the main obligation for obtaining additional revenue rests on taxation. One way of achieving this is through a buoyant or income elastic tax structure.;The main purpose of this study is to utilize annual data for the time period 1969/70 to 1980/81 to estimate the buoyancy and elasticity of the Tanzanian tax structure. These time series data are applied to a double logarithmic function to relate tax revenue to national income (GDP). The Dummy Variable, Prest, and Divisia Index techniques are used to separate discretionary tax revenue growth from automatic growth to obtain elasticity estimates.;The results of this study indicate that the Tanzanian tax system is buoyant, implying that a one percent change in income is accompanied by a more than one percent change in tax revenue. However, the study also suggests that the overall tax structure is income inelastic. At the same time, particular taxes such as the income taxes, the export tax, and the sales tax were found to be income elastic. This suggests that if the elasticity of the entire tax system is to be increased, these three taxes should be utilized more heavily.;Buoyancy measures the responsiveness of tax revenue to changes in national income or output, usually measured by GNP or GDP. In measuring buoyancy, no attempt is made to control for discretionary changes in the tax system or administration. Thus, buoyancy reflects both discretionary changes and automatic revenue growth. Elasticity measures the responsiveness of tax revenue to national income or output alone. In measuring elasticity an attempt is made to control for discretionary changes. Consequently, elasticity reflects automatic revenue growth.