The Causal Relationship Between Value- Added Tax and Social Conflicts: Evidence from Mozambique

The Causal Relationship Between Value- Added Tax and Social Conflicts: Evidence from Mozambique

Luciano S. Gule

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The University of Osaka

The Causal Relationship Between Value- Added Tax and Social Conflicts: Evidence from Mozambique

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Abstract

This research examines the causal relationship between social conflicts and Value-Added Tax (VAT) in Mozambique. The study tests two hypotheses; the “tax-burden” hypothesis which is used to evaluate the long-run relationship, and the “tax-conflicts” hypothesis which estimates the short-run relationship between VAT and social conflicts. Vector Error Correction Model (VECM) is used to examine this relationship. The data used comprise the period from 1994 to 2018. The outcomes of the study suggest that the prices of goods and services included in the new VAT system had a causal relationship with social conflicts in the short-run in Mozambique; these results support the “tax-conflicts” hypothesis. Under this hypothesis, the unsustainable tax imbalances can be mitigated by exempting or reducing the VAT of some indispensable consumption goods and services. The VECM results of long-run causal relationships suggest a bidirectional causality between VAT and social conflicts, supporting the “taxburden” hypothesis. Under this hypothesis our finding suggests that in the long-run Mozambique’s central government should design a new VAT system; expand and diversify the sources of revenue.

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

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Not applicable for this article.

How to Cite This Article

Luciano S. Gule. 2021. \u201cThe Causal Relationship Between Value- Added Tax and Social Conflicts: Evidence from Mozambique\u201d. Global Journal of Human-Social Science - E: Economics GJHSS-E Volume 21 (GJHSS Volume 21 Issue E5).

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GJHSS Volume 21 Issue E5

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Journal Specifications

Crossref Journal DOI 10.17406/GJHSS

Print ISSN 0975-587X

e-ISSN 2249-460X

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GJHSS-E Classification FOR Code: 149999

Submission ReceivedApril 5, 2021
Peer Review Double Blind
Handling Editor
Accepted May 1, 2021
Published May 15, 2021

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October 30, 2021

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