The Determinants of Tax Buoyancy : The determinants of tax buoyancy in developing nations: an experience from the Southern Africa Developing Countries

Southern African Development Community (SADC) countries, like many other developing countries face difficulties in raising tax revenue for public purposes. This study uses panel data for fourteen SADC countries during 1994-2005 to analyse empirically the determinants of tax buoyancy in developing nations. Among the variables identified as affecting annual tax buoyancy is monetization, with empirical results confirming its importance. The results have shown that the way monetization is handled in the developing nations affects annual tax buoyancy negatively. Other variables that have been found to be affecting tax buoyancy in developing nations include the growth in the agricultural and industrial sector contribution to national income, external aid growth, growth of fiscal deficit and growth of total expenditure. The determinants of tax buoyancy have been suggested following the tax handle theory advice. The study yielded such results because quality dimension of tax performance have been considered, which has been neglected by many previous authors .