THE IMPACT OF TAXATION ON ECONOMIC GROWTH OF LIBERIA

Dr. Phebe Padolo Moye

Abstract: The study examined the impact of taxation on economic growth in Liberia from 1997 to 2023. The study used yearly data generated from the World Bank Development Indicator Data Based. Yearly data on variables such as Gross Domestic Product, Foreign Direct Investment, Consumers price indexes, tax revenue, Employment Rate, and Government Expenditure covering the period from 1997 to 2022 were sourced from the World Development Indicators (WDI) of the World Bank, 2022 edition. Data collected were analyzed using empirical econometrics technique of the Augmented Dickey-Fuller test (ADF) and Phillip-Perron unit root test results showed that all the variables are co-integrated to the first order and vector error correction Model. The study found that the coefficients of foreign Direct investment (β1= 0.161.;<0.05 ); positive and statistically significant effect on foreign Direct investment in Liberia, on the other hand, consumer price indexes (β2= -0.036;p<0.05 ) has a negative implication on economic growth; government expenditure (β3= -0.179;p<0.05 ) and log tax revenue (β4= 0.232;p<0.05 ) has positive and significant effect on economic integration in the Liberian economy. The result implies that a unit increase in tax revenue will lead to 0.23% increase of the economic integration in Liberia. The study concluded that those variables play an important role in promoting economic integration in Liberia.