The Impact of Incentives on Economic Growth of Zimbabwe.

Author: Ndlovu, Nobuqotho

One of the government’s sources of revenue is taxation. Taxation enables the government to meet its expenditure on the public goods as well as provision of services to citizens. Whilst doing this, it is also the government’s main objective to increase economic growth and as part of its initiatives, the government of Zimbabwe has introduced incentives in the form of tax reliefs as well as export incentives to encourage. In doing so, the government also strives to strike a balance between revenue collected and incentives offered. The objective of the study was establish the impact of incentives on economic growth in Zimbabwe. The study explored available literature as well as theories of economic growth. For purposes of this study both secondary data and primary data were used. GDP, FDI and Exports were used as measures or indicators of economic growth whereas tax incentives on corporate income, tax incentives on personal income and export incentives were used to represent incentives. Primary data was used to reinforce secondary data and improve the reliability of data used for the study. Correlation, regression analysis and descriptive statistics were used to analyze data and it was established that there is a positive relationship between tax incentives on corporate income have a positive and GDP, FDI and Exports thus implying that tax incentives on corporate income have a positive impact on economic growth. It was also found that tax incentives on personal income and exports incentives are inversely related to GDP, FDI and Exports thus implying that export incentives have a negative impact on economic growth. Interviews were done and led the researcher to conclude that investors are fully aware of the incentives offered to them as the information is available to them as well as the accessibility of these incentives to every investor whether foreign or local investor. Recommendations were made which may help improve the incentives programs policies in Zimbabwe.