1.1. THE PROBLEM STATEMENT
Rwanda and others countries globally especially in Africa are
nowadays facing series of challenges when it comes to optimizing tax revenue
and tax to GDP ratio for economic growth and development .While aiming to reach
sustainable development objectives. The most obvious difficult challenge is how
to find the optimal balance between a tax regime that is employees, business
and investment friendly while at the same time leveraging enough revenue for
public service delivery which in turn makes the economy more attractive to
financiers.
In addition, tax compliance in Rwanda is doubtable as many
prefer not to pay tax. As a result of the unwillingness to pay tax as well as
evading tax, the economy therefore continues to lose huge amount of revenue. If
this lost tax revenue came back into the economy and well utilized, can change
the wealth of the nation. In developing countries like Rwanda, this problem has
been persistent for so long which requires serious attention and solution.
Therefore, assessing the impact of tax revenue on development
in Rwanda from during 10years from 2007 to 2017 is a research work carried out
at the right time as there is an urgent need to examine more deeply and to look
into the relationship between direct tax , tax on goods and services and tax on
international trade and transaction on economic growth and development of
Rwanda in Rwanda. This study will not only guarantee improved revenue base for
the Rwanda but also take full advantage to African Tax Administration Forum
members and global economies. Therefore, this research work examines the impact
of tax revenue on economic growth in Rwanda by analyzing the tax gap in the
system over the years and so revealing the critical challenges that needs to be
outgrowth. Hence, the need for further study of the tax performance and its
influence on the economic development of Rwanda.
1.2. OBJECTIVE OF STUDY
The general objective of this study is to find out how extend
tax revenue impacts on economic growth in Rwanda from 2007 to 2017. The
specific objectives of the study are to:
i.
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To analyze the relationship between direct tax and economic
growth in Rwanda;
ii. To examine the relationship between tax on goods and
services and economic growth in Rwanda; and
iii. To find out the relationship between tax on international
trade and transaction and economic growth in Rwanda
1.4. RESEARCH QUESTIONS
The research question of this study is concern about what is
impact of tax revenue on economic growth in Rwanda from 2007 to 2017?
1.5. HYPOTHESIS
This research work is guided to know if tax revenue components
impact positively or negatively by developing null and alternative hypotheses
below: i. H0 : There is no positive
significant relationship between direct tax and economic growth in Rwanda
H1: There is positive
significant relationship between direct tax and economic growth in Rwanda
ii.H0: There is no positive
significant relationship between tax on goods and services and economic growth
in Rwanda
H1:. There is positive significant
relationship between tax on goods and services and economic growth in
Rwanda.
iii..H0: There is no
positive significant relationship between tax on international trade and
transaction and economic growth in Rwanda.
H1: There is positive
significant relationship between relationship between tax on international
trade and transaction and economic growth in Rwanda.
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