Indirect Taxation and Income Inequality in Nigeria

Abstract

This study focused on the impact of indirect taxes on income inequality in Nigeria. The study employed the use of time series data ranging from 1990-2021. The data collected was analyzed using the error correction model. The result of the findings of the study indicates that stamp duty was found to have a negative impact on the Gini coefficient which is a measure for inequality. Custom and excise was found to have a positive relationship with Gini coefficient as revealed by the negative coefficient value. Value added tax was found to have a positive relationship with income inequality in Nigeria. It was also not found to be statistically significant when measured at 5% critical. It is therefore recommended that government as well as tax authority should create adequate avenue in which this corporate taxes will be harnessed to the fullest to avoid any form of evasion by tax offenders. It is therefore recommended that government should address the tariffs placed on exportation of some goods and services so has to reduce the level of income inequality that is prevalent in the society. It is therefore recommended that VAT on goods and services heavily consumed by low income households, like food items, should be either reduce or total exempted, while VAT should be imposed on goods heavily consumed by high income households

Keywords

References