Modelling the Effects of Variations in Corporate Tax Rate on Revenue Output in Zimbabwe
International Journal of Business and Economics Research
Volume 8, Issue 4, August 2019, Pages: 192-200
Received: May 10, 2019; Accepted: Jun. 24, 2019; Published: Jul. 9, 2019
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Leonard Mushunje, Department of Applied Mathematics and Statistics, Midlands State University, Gweru, Zimbabwe
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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.
Corporate Tax Effort, Lagrange Polynomial, Revenue, Output, Simple Logistic Harvesting Model, Variations
To cite this article
Leonard Mushunje, Modelling the Effects of Variations in Corporate Tax Rate on Revenue Output in Zimbabwe, International Journal of Business and Economics Research. Vol. 8, No. 4, 2019, pp. 192-200. doi: 10.11648/j.ijber.20190804.14
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