IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 10 NO. 3 2024
DOI: https://doi.org/10.56201/jafm.v10.no3.2024.pg35.50

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Determinants of Tax Capacity in Nigeria

Nwosu, Ngozi Glory, Prof. J. A. Nmesirionye

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Abstract

The study examined the determinants of tax capacity in Nigeria. The study covered from 2001 to 2021. The specific objectives were to examine the relationship subsisting between inflation and taxable capacity in Nigeria, to determine the extent to which level of economic development (using per capita income as the proxied variable) affects taxable capacity in Nigeria and to determine the impact of the size of economic openness (using net export as the proxied variable) on taxable capacity in Nigeria. The study adopted ex-post facto research design. The study data was sourced from Central Bank of Nigeria Statistical bulletin. The stated hypotheses were analysed with ordinary least square regression. The findings of the study revealed that inflation has negative and insignificant effect on taxable capacity in Nigeria. Economic development (per capita income) has positive and insignificant effect on taxable capacity in Nigeria and economic openness (net export) has positive and insignificant effect on taxable capacity in Nigeria. It was recommended government should regulate the issue of tax effectively such that disposable income of both the individual and corporate organization left after tax payment will breed saving so as to create more investment which will invariably generate more employment opportunity and curb inflation in the country ‘

keywords:

Tax capacity, inflation, per capita income, net export and economic openness,

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References:

Basir, K. A., Liudmila, L. I., Khaibat, M. M., Magomed, M. S. & Madina,G. A. (2015). Priority
guidelines for strengthening regional taxable capacity as a factor of sustainable
development of the territorial entities. Mediterranean Journal of Social Sciences, 6(5):
231 - 238.

Ben, L. & Tim, O. (2015). Tax revenue potential and effort. International Growth Centre
Working Paper, IGCWP/15/003.
Botlhole, T. D. (2010). Tax effort and the determinants of tax ratio

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