Abstract

This study investigates the impact of climate changes and weather abnormalities on tax revenue compliance in Rwanda, spanning the period from 2006Q1 to 2021Q4. Through a comprehensive analysis of tax revenue trends and key environmental variables, it unravels the intricate relationship between climate dynamics and fiscal performance. Descriptive statistics highlight patterns in tax revenue and climate-related factors, offering nuanced insights. The historical trends reveal fluctuations in Domestic Tax, Tax on Goods and Services, and Tax on International Trade and Transactions, indicating robust growth in domestic revenue mobilization. The study explores the repercussions of climate-induced events on vital economic sectors, identifying challenges posed by events such as droughts and floods. Regression analysis identifies unemployment and the informal sector as significant factors inducing low tax revenue in Rwanda. This research recommends diversifying revenue sources away from climate-vulnerable sectors, investing in resilient infrastructure, integrating climate adaptation into policies, fostering inclusive economic growth, prioritizing unemployment mitigation, implementing continuous monitoring, and promoting international collaboration.

Keywords: Climate changes, Weather abnormalities, Tax revenue, Rwanda