Impacts of Tax Revenue on Economic Growth in Nigeria&colon; An Aggregate and Disaggregate Analysis

SANI; Abdurrahman Bala PhD; AHMAD; Musbahu Bunza

Impacts of Tax Revenue on Economic Growth in Nigeria&colon; An Aggregate and Disaggregate Analysis

SANI, Abdurrahman Bala PhD AND AHMAD, Musbahu Bunza

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 TaxCompany Income TaxCustom and Excise DutiesGDP.

References

Abdullahi, U., Madu I. &Abdullahi, F. (2015). Evidence of petroleum resources on Nigerian economic development. Business and economics journal, 6(2), 11-18. Adegbie, F.F and A. S. Fakile (2011). Company Income Tax and Nigeria Economic Development”, European Journal of Social Sciences, 22(2). Adegbite, F. F. (2015). Company Income Tax and Nigeria economic development. European Journal of Social Sciences, 22 (2), 309-320. Akhor, S.O. and Ekundayo O.U., (2016). The impact of indirect tax revenue on economic growth: The Nigerian Experience. Igbinedion University Journal of Accounting, Vol. 2 (3), 62-87. Alfred, G. (2005). Models of economic growth. Mathematical Models in Economics. Anyaduba, I. and Aronwa, A. (2015). Innovative approach in SME financing in Nigeria. A Review of small andmedium industries Equity Investment scheme Journal of Social Science 11(3). Anyanwu, J. C. (1993). Monetary Economics: Theory, Policy and Institutions. Onitsha: Hybrid Publishers. Appah, E., (2010). The problems of tax planning and administration in Nigeria: The Federal and State Governments Experience. Asian Journal of Research in Banking and Finance, 4(12), 1-14. Ariwodola, J. A. (2000). Personal Taxation in Nigeria. (4thed.). Lagos; JAA Nigeria Ltd. Attama, N. (2004). Taxation and Fiscal Policy. Enugu, Nigmos Publishers Baranova, V., and Janickova, L., (2012). Taxation of corporations and their impact on economic growth Buba, A. N (2007), Private sector and generation of tax revenue, Journal of Association of National Accountant of Nigeria 2 (1)4 1- 49. Buyonge, C. (2008). Organisational design of customs in sub-sahara Africa: Acritical evaluation, World customs journal. CAMA (1990), Lagos federal press Nigeria companies and allied act 1990: Lagos Federal Government Press. CBN (Central Bank of Nigeria) (2010): CBN 2010 Annual Report, pp91-112. Chaudhry, M. and M. Choudhary (2006).Why the state bank of Pakistan should not adopt inflation targeting. SBP-Research Bulletin, 2(1):196-2009. Chigbu E.E., and Njoku C.O. (2015) Taxation and the Nigerian Economy: (1994-2012) Management Studies and Economic Systems (MSES),2 (2),111-128. CIT (1990), Companies Income Tax Act CAP6OLFW.Lagos, Federal Government Printer. Company Income Tax (Amendment) Act 2007. Cornelius, A. A, Ogar, H.T & Oka, T.A, (2016). The analysis of the effect of petroleum profit tax on Nigerian economy. Asian Journal of Humanities and Social Sciences 1(1), 25- 36. Evans, J. & Hunt, L. (2011). International Handbook on the Economics of Energy. Massachusetts, USA: Edward Elgar Publishing Inc Eyisi, A., Chioma, D. and Bassey, B. E., (2015),An Empirical Investigation of the Effect of Taxation on Macro Economic Performance in Nigeria. Journal of Economics and sustainable Development Vol.6( 6) 175-184. Fowler, B. (2018), Understanding voluntary assets and income declaration scheme. The nation newspaper, retrieved on 10/09/2018. Page 32

Impacts of Tax Revenue on Economic Growth in Nigeria&colon; An Aggregate and Disaggregate Analysis

Abstract

Keywords

References

More Articles from INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT