An assessment of the Impact of the VAT and Revenue Collection on GDP: The Case of Zanzibar Revenue Board

his research work studied the assessment of the impact of the VAT and revenue collection on GDP -ZRB. It attempted to examine the contribution of VAT on revenue collection in ZRB, the extent to which VAT has contributed to the steady growth in Gross Domestic Product in Zanzibar and also assessed the challenges of revenue Collection in ZRB. To attain that above, VAT inflows, revenue collection and GDP data from 2002 to 2012 are collected from public publications which are stored both in hard copy and softy copy and 20 questionnaires were distributed and administered effectively. For this study data and information base, was built from both primary which was obtained from interviewing 20 respondents of ZRBs’ staff, and secondary sources which was obtained from annually report on economic growth, publication from economic survey published by Government of Zanzibar and National Bureau of Statistics (NBS) data sources were consulted. The study employed the Ordinary least Square method to analyze the contribution of VAT on revenue collection in ZRB and the extent to which VAT has contributed to the steady growth in Zanzibar economy. Also used SPSS to analyze the challenges facing ZRBs’ staff on revenue Collection. The result of the study revealed that value added tax is beneficial to the Zanzibar economy. The behavior shows that value added tax is statistically significant to revenue generated by ZRB in Zanzibar. From the findings, for Zanzibar to attain its economic growth and development, she must be able to generate enough revenue meet up with the challenges of her expenditures in term of provision of social facilities and the running costs of the Government. Key words: GDP, VAT, Revenue Zanziba