IIARD International Institute of Academic Research and Development

WORLD JOURNAL OF FINANCE AND INVESTMENT RESEARCH (WJFIR )

E-ISSN 2550-7125
P-ISSN 2682-5902
VOL. 7 NO. 2 2023
DOI: https://doi.org/10.56201/wjfir.v7.no2.2023.pg1.27

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Impact of Tax Revenue on Investment in Nigeria

Ibiam Mercy A . and Uguru Leonard C

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Abstract

The study examined the Impact of Tax Revenue on Investment in Nigeria for the period of 1999 to 2021. Specifically, the impacts of tax revenue measured by company income tax, value added tax, petroleum profit tax, and custom & excise duties on Investment (proxied by Gross Fixed Capital Formation) were examined. The Benefits Theory of Taxation and Currency Area Theory were adopted for the study. The study employed ex post facto research design. Data was obtained through the Central Bank of Nigeria Statistical Bulletin, Federal Inland Revenue Service (FIRS) Publications, and National Bureau of Statistics Bulletins for the years under consideration. The multiple ordinary least square linear regression model involving ordinary least square (OLS) estimation approach using E-view econometric software version 12 was used to analyze the data so collected. The study made the following findings: that company income tax has significant negative effect on Investment; that there is presence of negative and significant effect of value added tax on Investment; that petroleum profit tax has positive and significant effect on gross fixed capital formation; and that custom and excise duties has positive but significant effect on Investment in Nigeria. It concluded that tax revenue has significant effects on Investment in Nigeria. The study then recommended among others that Nigerian government should pay particular attention to the reduction of the company income tax rate because high tax rate has the tendency of adversely affecting Investment.

keywords:

Tax Revenue, Investment, Gross Fixed Capital Formation, Company Income Tax, Value Added Tax

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References:

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Adegbie, F. F., Nwaobia, A. N. and Osinowo, O. (2020). Non-Oil Tax Revenue on Economic
Growth and Development in Nigeria. European Journal of Business and Management Research,
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Adeusi, A. S., Uniamikogbo, E., Erah, O. D. and Aggreh, M. (2020). Non-Oil Revenue and
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Agbarakwe, W. C. (2019). An Empirical Assessment of the Impact of Corporate Tax on Private
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