Evaluation of Direct and Indirect Tax Effects on the Nigerian Economy

Nwosu; Samuel N; Uma; Idika Kalu; Onehi; Damian Haruna; Madubuike Kenneth O

doi:10.56201/ijefm.v10.no9.2025.pg106.116

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Evaluation of Direct and Indirect Tax Effects on the Nigerian Economy

Nwosu, Samuel N, Uma, Idika Kalu, Onehi, Damian Haruna, Madubuike Kenneth O

Abstract

This study evaluated the direct and indirect tax effect on the economic growth of Nigeria. Tax is a compulsory levy imposed by the government on her citizens. The essence basically is for revenue generation which in turn will be used for provision of amenities needed by her citizens for their wellbeing and existence. Despite the forgoing, the economy seems not to be growing as expected despite the huge tax revenue the country gets. There is the challenge of possible tax evasion, wrong and unproductive application of tax revenue. The specific objectives of this study were to: assess the effect of company income tax, value added tax and gross fixed capital formation on real gross domestic product of Nigeria covering the period 1981 to 2023. The study is anchored on the benefits received theory of taxation (BRTT), while the ex-post facto research design was adopted. The Central Bank of Nigeria statistical bulletin was the source of data which was analysed using ADF unit root test, Johansen cointegration test and multiple regression analysis. The findings of this study indicate that: company income tax has non-significant effect; value added tax has significant effect while gross fixed capital formation has significant effect on real gross domestic product in Nigeria for the period reviewed. Conclusively, taxes jointly have significant effect on real gross domestic product in Nigeria for the period reviewed. Recommendations: (1) The government need to review the tax collection procedures to eradicate tax evasion and increase revenue. (2) The government need to ensure the proper utilization of her tax revenue for productive contribution to real gross domestic product.

Keywords

company income taxvalue added taxgross fixed capital formationreal gross

References

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Evaluation of Direct and Indirect Tax Effects on the Nigerian Economy

Abstract

Keywords

References

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