Revenue Under Siege: Assessing The Statistically Significant Impact of the COVID-19 Pandemic on Sectoral Tax Collection in Zambia

Abstract

The COVID-19 pandemic posed unprecedented challenges to domestic revenue mobilisation worldwide, with developing economies especially exposed given their already constrained fiscal capacity. Although a substantial body of research has documented the macroeconomic shocks the pandemic caused globally, empirical evidence on its statistical impact on sectoral tax collection in Zambia has remained limited. This study addresses that gap using a five-year panel of administrative tax data (2017-2021) obtained from the Zambia Revenue Authority (ZRA), covering sixteen tax sectors grouped under direct, indirect, and trade taxes. A mixed-methods design was adopted in which quantitative analysis was dominant, complemented by qualitative evidence drawn from key informants within the revenue administration so that the statistical results could be interpreted alongside institutional experience. After checking the relevant assumptions, a repeated measures ANOVA was used to compare annual aggregate tax collections across the study period. All four multivariate statistics (Pillai’s Trace, Wilks’ Lambda, Hotelling’s Trace, and Roy’s Largest Root) produced identical, statistically significant results (p < 0.05) with a large effect size (partial η² = 0.618). Bonferroni-adjusted post-hoc comparisons showed that tax collection in 2021 differed significantly from 2017, 2018, and 2020, indicating that COVID-19 depressed revenue collection across sectors before a recovery took hold in the final year of the study. The qualitative evidence indicates that this recovery coincided with the Zambia Revenue Authority’s move toward digitalised tax administration and more innovative approaches to managing compliance, alongside a broader institutional push to build resilience against future shocks. The study contributes to the growing body of knowledge on the pandemic’s fiscal effects globally and in developing economies specifically and offers policy recommendations of value to the Zambian government and to comparable economies elsewhere.