IIARD International Institute of Academic Research and Development

Journal of Business and African Economy (JBAE )

E-ISSN 2545-5281
P-ISSN 2695-2238
VOL. 10 NO. 5 2024
DOI: 10.56201/jbae.v10.no5.2024.pg1.23

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Federally Collected Taxes and Economic Growth in Nigeria

Korolo, Emmanuel Omolaye (Ph.D.), Korolo Akuboere Salome (Ph.D)

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Abstract

This study examines the federally collected taxes on economic growth in Nigeria. The study proxies federally collected taxes with companies' income tax, petroleum profits tax, Custom and Excise Duties, and value-added tax while economic growth is proxy with real gross domestic product. It adopts an ex post facto research design. The study employs secondary data from the various annual official publications of the Federal Inland Revenue Service and the Central Bank of Nigeria Statistical Bulletin. These data were collected over thirty years, covering the period from 1994 to 2023. The study employs the Vector Error Correction Model to estimate both short- and long-term effects of federally collected taxes on economic growth in Nigeria. The study found that companies' income tax, petroleum profits tax, and value-added tax have a positive significant effect on economic growth in Nigeria in the long run. In the short run, companies' income tax and Value Added Taxes have no significant effect on economic growth, while Petroleum profits tax has a significant positive effect on economic growth in Nigeria in the short run. The study concludes that federally collected taxes, such as companies' income tax, petroleum profits tax, and value-added tax enhance the economic growth of Nigeria in the long run. The study also concludes that in the short run petroleum profits tax improves the Nigerian economy while companies' income tax and value-added do not improve the economic growth of Nigeria in the short run. It recommends that government should continue to ensure that tax revenues are properly managed in a manner that will accelerate economic growth.

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