IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 9 NO. 2 2023
DOI: https://doi.org/10.56201/jafm.v9.no2.2023.pg78.93

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Elements of Internally Generated Revenue and Economic Growth in Lagos State

Ibukun M. Falayi, FCA, Ph.D

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Abstract

State governments in Nigeria need revenue to invest in social infrastructures and creating social safety nets to stimulate economic growth. One of the sources of revenue that state governments have direct control over to maximize domestic revenue is the internally generated revenue. Empirical evaluation of the relationship between internally generated revenue and economic growth, therefore, becomes imperative. Consequently, this study examined the relationship between the components of Internally Generated Revenue (IGR) and Economic Growth (GDP) in Lagos State. The research design is ex-post facto while the period of study was from 2012 to 2020. The data obtained on the dependent and explanatory variables from National Bureau of Statistics and Lagos State Bureau of Statistics was analysed with the Autoregressive Distributed Lag technique. The results show a long-run significant relationship for other taxes, direct assessment and road taxes with gross domestic product in Lagos state, leaving out pay as you earn with insignificant impact. In the short run, however, other taxes, direct assessment, pay as you earn and road taxes have positive and significant relationship with gross domestic product. The F-statistic of 824.42 with a probability value of 0.000 at 1 percent level suggests that internally generated revenue exerts significant influence on gross domestic product in Lagos State. The study concluded that internally generated revenue strengthened economic growth in the state. Lagos State government should sustain the current tempo of domestic revenue mobilization drive with special emphasis on pay as you earn as a component of internally generated revenue to spur economic growth.

keywords:

Internally generated revenue, Direct assessment, Road taxes, Pay as you earn, Other taxes, Gross domestic product

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