Abstract:
The main objective of the study was to investigate the implication of tax reforms on the
economy of Tanzania. The study was guided by three specific objectives. One was to
investigate the relationship between income tax reforms and the economy of Tanzania. Second was to examine the relationship between VAT reforms and the growth of Tanzania
economy, and lastly was to assess the relationship between citizens tax burden on the growth
of Tanzania economy. From the secondary data employed from the World Bank for the
sample period of 32 years from 1990 to 2021. The study findings revealed a significant impact
of tax reforms on the economy of Tanzania. From the findings, the model revealed that, estimated regression model is statistically significant at 5% level of significant. This was
provided by the probability of F-statistic of 0.000106 which is less than 0.05 level of significnce
at 95% confidence level. This indicate that, the independent variables (income tax, VAT, tax
burden and inflation rate) are statistically significant predictor of economic growth in Tanzania. The adjusted R-squared shows that, 71.6% of the variation of countrie's GDP has been
explained by independent variables (income tax, VAT, tax burden and inflation rate). The
findings further revealed that, tax reforms (income tax and VAT) has a significant positive
relationship with the economic growth of Tanzania. However, tax burden revealed a negative
significant relationship with economic growth of Tanzania. The researcher recommended that, the government of Tanzania, when considering change of a taxes, should expand the tax
bracket of Income Tax in order to collect more revenue for funding its expenditure instead of
borrowing. This is because Income Tax positively affecting the economic growth. Secondly, VAT should be streamlined to make progress such that it's applied discriminatively in that
goods and services used by affluent segments of the population attract relatively higher taxes
