The study concluded that tax revenue has a significant positive relationship with Gross Domestic Product. Findings indicated that tax revenue is positively related to GDP and promotes Economic Growth in Africa. To confirm the robustness and validity of regression model, some post estimation tests are conducted which were omitted Variable Test, and Heteroscedasticity test. The study conducted the Hausman-Test to determine the appropriate estimator between Fixed and Random Effect.
The appropriate fixed and random effect test was employed to determine the fitness of the model using the Hausman test. The study carried out various preliminary tests including descriptive statistics, and stationary tests using Augmented Dickey Fuller (ADF) test, Levin et al. Against this background, the study investigated the impact of taxation on economic growth in Africa from 2004 to 2013. The debate on the effectiveness of taxes as a tool for promoting growth and development remains inconclusive, as several studies have indicated mixed impacts of tax on economic growth. As most developing countries strive to achieve economic growth and development through taxation, they face numerous economic challenges.
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