The Nexus between Degree of Commercialization, Trade Openness and Tax Revenue Performance in Tanzania

Abstract

The study was mainly focused on evaluating the nexus between degree of monetization and tax revenue performance in Tanzania. Specifically, the study intends to examine the share of broad money (M2) to GDP and how it influences tax revenue performance in Tanzania. Time series research design was employed, and purposive sampling was used here and has opted for a quantitative research approach while time series data research design was employed.  The study used secondary data obtained from the Bank of Tanzania (BoT), International Monetary Fund (IMF) and World Bank (WB). The data ranges were from 1970-2020. Findings from the study revealed that agriculture shares were positively related to the tax revenue performance, foreign aids were positively related to the tax revenue performance, political stability were positively related to the tax revenue performance Finally trade openness influenced tax revenue performance.  The study concluded that degree of commercialization was positively related to the tax revenue performance. Therefore, this study recommends that policy makers may enact good policy, laws and regulations that will enhance the government to improve the overall tax revenue performance in Tanzania. Also, the study recommends that the government to encourage the exportation to increase tax revenue performance in Tanzania.