| Peer-Reviewed

Modelling the Effects of Variations in Corporate Tax Rate on Revenue Output in Zimbabwe

Received: 10 May 2019     Accepted: 24 June 2019     Published: 9 July 2019
Views:       Downloads:
Abstract

Corporate tax, has significantly become one of the major sources of revenue to the government. Whether the economy is shadow, enriched or booming, its government needs some revenue to promote and to lubricate its formal sector. Because of this, corporate tax at varying rates are being agreed and set by Zimbabwean government. However, less on the effects of corporate tax on revenue yields seems to be known and understood in Zimbabwe. Our conjecture was to study the effects of varying corporate tax rate on revenue. We used the simple logistic harvesting model with varying effort coefficient. Quantitative, qualitative and geometric methods were used for model results and analysis. The research was more of theoretical with a small data set used only for validating the polynomial estimation model. Interestingly, all the methods seem to move in the same direction. The results suggest that revenue is inversely related to company tax. Lastly, we used a Lagrange polynomial to predict possible revenue output from any given corporate tax rate. So, the government can use the polynomial framework when considering a revenue-neutral tax reform to apply to its economy. To validate the polynomial function, we applied the mean absolute percentage error method which supported its use.

Published in International Journal of Business and Economics Research (Volume 8, Issue 4)
DOI 10.11648/j.ijber.20190804.14
Page(s) 192-200
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2019. Published by Science Publishing Group

Keywords

Corporate Tax Effort, Lagrange Polynomial, Revenue, Output, Simple Logistic Harvesting Model, Variations

References
[1] Aamir m, butt s, hussain s, khan ki, nasir a, qayyum a. Determinants of tax revenue: a comparative study of direct taxes and indirect taxes of pakistan and india. Vol 2 no. 19 (special issue-october 2011).
[2] James s, nobes c (2014). Economics of taxation, isnb. 978-1906201-25-8.
[3] Aamir m, butt s, hussain s, khan ki, nasir a, qayyum a. Determinants of tax revenue: a comparative study of direct taxes and indirect taxes of pakistan and india. Vol 2 no. 19 (special issue-october 2011).
[4] Karas, m.: tax rate to maximize the revenue: laffer curve for the czech republic. Actauniv. Agric. Etsilvic. Mendel. Brun., 2012, lx, no. 4, pp. 189–194.
[5] Romer, c and romer, d. (2010). The macro-economic effects of tax changes: estimated based on a new measure of fiscal shocks. American economic review, 100 (3), 763-801.
[6] Ferede, e., dahlby, b. (2012). The impact of tax cuts on economic growth: evidence from the canadian provinces. National tax journal, 65 (3), 563-594.
[7] Ausubel, jh, meyer ps. Carrying capacity, a model with logistically varying limits. Technological forecasting and social change 1999; 61: 209-214.
[8] Musgrave. R. And musgrave p. (1980). Public finance in theory and practice, (3rd edition). Tokyo: mcgraw-hill co.
[9] Mashkoor. Massod (2010). “tax revenue and economic growth: an empirical analysis for pakistan”. World applied sciences journal 10 (11) pp- 1283-1289.
[10] Scholes, ms.; wolfson, ma. Erickson, mm; maydew, el.; and shevlin. Ausubel, jh, yungjw, meyer ps. A primer on logistic growth and substitution. Technological forecasting and social change 1999; 61: 247-271.
[11] Lee. Y., and gordon. R. H. "tax structure and economic growth." journal of public economics, vol. 89. Issues 5-6, 2005, pp. 1027-43.
[12] yayakeho (2011). ‘tax structure and economic growth in cote d’ ivoire: are some taxes better than others?” Asian economic and financial review vol. I, no. 4, pp. 226-235.
[13] Laffer, a. B., 2004: the laffer curve: past, present, and future. [cit. 2011-10-19]. Cited from http://www.heritage.org/research/reports/2004/06/thelaffer-curve-past-present-and-future.
[14] Oecd, (1996). Definition of taxes, daffe/mai/eg2 (96) 3.
[15] Ndedzu, d, macheka, m. Mavesere, i, zivengwa, t. Revenue productivity of zimbabwe’s tax system, issn: 2186-8492, vol 2 no 4 (2013).
[16] Gerald ea, edwardhr (1976). A general model for state tax revenue analysis vol 29, no 4 (1976) pp. (422-435).
[17] Dixon jm, nassios j. Modelling the impacts of a cut in company tax in australia. No g206 2016.
[18] Kalas b, mirovic v, andrasic j. Estimating the impacts of taxes on the economic growth in the united states (2017) 55 (4): 481-499.
[19] Jensen, m, mathur, a, kallen, c. (2017). Analysing the link between corporate tax, investment and GDP (online). Available at www.aei.org/publication/analysing the link between corporate tax, investment, GDP.
[20] “taxes and business strategy, a planning approach,” prentice-hall, upper saddle river, nj.
[21] Diprimarc, williameb (2001) elementary differential equations and boundary value problems. Usa: john wiley and sons. inc.
[22] Suli e, meyers d. (2003) an introduction to numerical analysis. Cape town: cambridge university press.
[23] Suyono, e and yi, f. (2014) the relationship between tax revenue and economic growth of hebei province based on the tax multiplier effect. Vol. 7. No. 2. September 2014. Pp. 1 – 18.
[24] T. Nyoni (2017), The Curse Of Corruption In Zimbabwe. International Journal of Advanced Research and Publications.
Cite This Article
  • APA Style

    Leonard Mushunje. (2019). Modelling the Effects of Variations in Corporate Tax Rate on Revenue Output in Zimbabwe. International Journal of Business and Economics Research, 8(4), 192-200. https://doi.org/10.11648/j.ijber.20190804.14

    Copy | Download

    ACS Style

    Leonard Mushunje. Modelling the Effects of Variations in Corporate Tax Rate on Revenue Output in Zimbabwe. Int. J. Bus. Econ. Res. 2019, 8(4), 192-200. doi: 10.11648/j.ijber.20190804.14

    Copy | Download

    AMA Style

    Leonard Mushunje. Modelling the Effects of Variations in Corporate Tax Rate on Revenue Output in Zimbabwe. Int J Bus Econ Res. 2019;8(4):192-200. doi: 10.11648/j.ijber.20190804.14

    Copy | Download

  • @article{10.11648/j.ijber.20190804.14,
      author = {Leonard Mushunje},
      title = {Modelling the Effects of Variations in Corporate Tax Rate on Revenue Output in Zimbabwe},
      journal = {International Journal of Business and Economics Research},
      volume = {8},
      number = {4},
      pages = {192-200},
      doi = {10.11648/j.ijber.20190804.14},
      url = {https://doi.org/10.11648/j.ijber.20190804.14},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20190804.14},
      abstract = {Corporate tax, has significantly become one of the major sources of revenue to the government. Whether the economy is shadow, enriched or booming, its government needs some revenue to promote and to lubricate its formal sector. Because of this, corporate tax at varying rates are being agreed and set by Zimbabwean government. However, less on the effects of corporate tax on revenue yields seems to be known and understood in Zimbabwe. Our conjecture was to study the effects of varying corporate tax rate on revenue. We used the simple logistic harvesting model with varying effort coefficient. Quantitative, qualitative and geometric methods were used for model results and analysis. The research was more of theoretical with a small data set used only for validating the polynomial estimation model. Interestingly, all the methods seem to move in the same direction. The results suggest that revenue is inversely related to company tax. Lastly, we used a Lagrange polynomial to predict possible revenue output from any given corporate tax rate. So, the government can use the polynomial framework when considering a revenue-neutral tax reform to apply to its economy. To validate the polynomial function, we applied the mean absolute percentage error method which supported its use.},
     year = {2019}
    }
    

    Copy | Download

  • TY  - JOUR
    T1  - Modelling the Effects of Variations in Corporate Tax Rate on Revenue Output in Zimbabwe
    AU  - Leonard Mushunje
    Y1  - 2019/07/09
    PY  - 2019
    N1  - https://doi.org/10.11648/j.ijber.20190804.14
    DO  - 10.11648/j.ijber.20190804.14
    T2  - International Journal of Business and Economics Research
    JF  - International Journal of Business and Economics Research
    JO  - International Journal of Business and Economics Research
    SP  - 192
    EP  - 200
    PB  - Science Publishing Group
    SN  - 2328-756X
    UR  - https://doi.org/10.11648/j.ijber.20190804.14
    AB  - Corporate tax, has significantly become one of the major sources of revenue to the government. Whether the economy is shadow, enriched or booming, its government needs some revenue to promote and to lubricate its formal sector. Because of this, corporate tax at varying rates are being agreed and set by Zimbabwean government. However, less on the effects of corporate tax on revenue yields seems to be known and understood in Zimbabwe. Our conjecture was to study the effects of varying corporate tax rate on revenue. We used the simple logistic harvesting model with varying effort coefficient. Quantitative, qualitative and geometric methods were used for model results and analysis. The research was more of theoretical with a small data set used only for validating the polynomial estimation model. Interestingly, all the methods seem to move in the same direction. The results suggest that revenue is inversely related to company tax. Lastly, we used a Lagrange polynomial to predict possible revenue output from any given corporate tax rate. So, the government can use the polynomial framework when considering a revenue-neutral tax reform to apply to its economy. To validate the polynomial function, we applied the mean absolute percentage error method which supported its use.
    VL  - 8
    IS  - 4
    ER  - 

    Copy | Download

Author Information
  • Department of Applied Mathematics and Statistics, Midlands State University, Gweru, Zimbabwe

  • Sections