Tax and income inequality: evidence from Sub-Saharan Africa

Abstract

Purpose

This study aims to determine how taxes can be used to bridge income inequality gap in sub-Saharan Africa (SSA).

Design/methodology/approach

A panel data set of 36 SSA countries was analysed using generalised method of moments.

Findings

The results suggest that an increase in direct taxes relative to indirect taxes has a positive significant impact on income inequality. This is mostly due to the progressive nature of direct taxes as compared to indirect taxes.

Originality/value

This research contributes to the scant literature on how specific tax components affect income inequality, especially in developing countries.

Citation

Brown, T.A.K., Bokpin, G.A. and Sarpong-Kumankoma, E. (2023), "Tax and income inequality: evidence from Sub-Saharan Africa", International Journal of Development Issues, Vol. 22 No. 3, pp. 345-360. https://doi.org/10.1108/IJDI-12-2022-0277