Journal of Economics and Development Studies

Do Taxes Matter in Business Fixed Spending Decisions by Zimbabwe Firms?
Joe Muzurura

Abstract
The paper examines the effect of taxation on business fixed spending decisions onZimbabwe private firms.Business fixed spending decisions by private firms are very critical for economic growth and development in most developing countries. Higher taxation rates affect the efficiency of production and theequitable distribution of wealth in an economy. Efficient taxes with no excess burden to firms and other economic agents are fundamental forraising government revenue, enhancing price stability, and increasing domestic investment as well accelerating the pace of economic growth in developing countries. Our study confirms taxes, high level ofpublic corruption, adequate domestic savings, and lagged GDP as determinants of business fixed spending decisions.The findings suggestthat most of the tax revenue in developing economies should be channelled to productive public expenditure such as roads, bridges, rail, energy, transport and other communication networks that are most likely to stimulate the productivity of private domestic investment. We recommend that policy makers should formulate and implement tax rules and policies that eliminate tax evasion, stimulate domestic savings,minimise tax avoidance and reduce the level of public corruption in order to achieve faster economic growth and development.

Full Text: PDF     DOI: 10.15640/jeds.v6n3a6