IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 4 NO. 4 2019

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Impacts of Tax Revenue on Economic Growth in Nigeria: An Aggregate and Disaggregate Analysis

SANI, Abdurrahman Bala PhD AND AHMAD, Musbahu Bunza

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Abstract

The primary goal of any developing country is to increase the rate of economic growth and per capital income which leads to a higher standard of living. Thus, taxation can be used as a stimulus to accelerate such growth in the Nigerian economy. Combined with economic growth, it reduces long term reliance on aid and ensures good governance by promoting the accountability of governments to their citizens. It has been observed that in Nigeria, the quantum of income generated from non-oil tax over the years by the federal government is grossly insufficient in relation to the ever increasing social, political and infrastructural developmental needs of the country. In Nigeria revenue derived from income taxes has been grossly understated due to improper tax administration, assessment and collection. Its in the light of these and many more that this study examined the impact of tax revenue on aggregate and disaggregate on economic growth in Nigeria for the period 1979-2018 with purposive sampling technique. ARDL model was employed. The result showed that PPT has significance effect on gross domestic product with coefficient 0.4675 at 5% level of significance. Company income tax also has a positive significant effect on economic growth with coefficient 0.1975 with p-value of 5% level of significant. The overall result showed significant effect of tax revenue on aggregate on economic growth. The study then concluded that there is urgent need for government to prioritize her needs as petroleum revenue continues to decrease. Therefore the study recommends that government should try to diversify the economy as revenue generated from petroleum should be used to develop other sectors of income generation.

keywords:

Petroleum Profit Tax, Company Income Tax, Custom and Excise Duties, GDP.

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