EFFECTS OF TAXATION ON ECONOMIC GROWTH

The development of endogenous growth theory has opened an avenue through which the effects of taxation on economic growth can be explored. Explicit modeling of the individual decisions that contribute to growth allows the analysis of tax incidence and the prediction of growth effects. This study, titled "Effects of Taxation on Economic Growth (Uganda''s Experience: 1987-2005)", reviews the theoretical and empirical evidence to assess how taxation affects the rate of economic growth in Uganda. In the methodology for this study, labour, capital, government consumption and revenue from the different tax components were used as the explanatory variables against GDP as the explained variable. Estimates of this study only reflect the cost of a combined tax and expenditure system and ignore effects caused by political decisions, corruption and other redistribution policies.