Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD

Effect of Taxation on Nigerian Economic Development

Onukelobi-Emeka Chinwe Peace PhD Okwuego Sopuruchukwu Peace PhD Ifeme, Sylvester Chinweike Taiwo Aduragbemi Precious

Abstract

This study investigates the impact of taxation on economic growth in Nigeria, focusing on Value Added Tax , Company Income Tax , and Personal Income Tax over the period 2020–2024. An ex post facto research design was adopted, and secondary data were analyzed using regression techniques, with Gross Domestic Product serving as a proxy for economic growth. The findings reveal that VAT and PIT exert positive but statistically insignificant effects on GDP, indicating their limited contribution to economic growth within the study period. In contrast, CIT shows a negative and marginally insignificant relationship with GDP, suggesting that corporate taxation may hinder investment and reduce economic performance when inefficiently structured. Overall, the results indicate that the Nigerian tax system has not effectively translated revenue generation into sustainable economic growth. The study concludes that structural inefficiencies, narrow tax bases, weak compliance, and poor revenue utilization constrain the effectiveness of taxation in Nigeria. It recommends reforms aimed at improving tax administration, broadening the tax base, and enhancing transparency and accountability in public revenue management.

Keywords

TaxationEconomic GrowthValue Added TaxCompany Income TaxPersonal Income TaxNigeria

References

Adebamiwi, O., Daniel, O. B., & Ojo, B. (2023). Taxation and budgeting policy in developing nations: An economic growth approach. International Journal of Fiscal Policy and Economics, 14(2), 67–83. Adegbie, F. F., & Fakile, A. S. (2011). Company income tax and Nigeria economic development. European Journal of Social Sciences, 22(2), 309–332. Adereti, S. A., Adesina, J. A., & Sanni, M. R. (2011). Value added tax and economic growth of Nigeria. European Journal of Humanities and Social Sciences, 10(1), 456–471. Adigwe, P. D., & Oyadonghan, K. J. (2020). Taxation as a stimulus for economic growth in Nigeria. Research Journal of Finance and Accounting, 11(2), 74–82. https://doi.org/10.7176/RJFA/11-2-07 Ajala, M. O., & Afolabi, J. O. (2021). Taxation and economic development in Nigeria: An empirical investigation. Journal of Public Finance and Policy Issues, 12(1), 56–71. Aondoakaa, K., Austine, B. J., & Isaac, O. (2022). Impact of taxation on the economic growth in Nigeria (1999–2020). Journal of Taxation and Economic Development, 6(2), 101–117. Aondoakaa, K., Ujah, A., & Kwanum, I. (2022). An analysis of taxation and economic growth in Nigeria. UMYU Journal of Accounting and Finance Research, 3(1), 154–169. https://doi.org/10.61143/umyu-jafr.v3i1.009 Appah, E., & Ebikemefa, I. L. (2024). Taxes and road infrastructural development in Nigeria. African Journal of Accounting and Financial Research, 7(2), 45–60. https://doi.org/10.52589/AJAFR-GOSNW3ER Asuquo, A. I., & Agboola, M. G. (2019). Taxation and economic development in Nigeria: An empirical analysis. Journal of Accounting and Financial Management, 5(4), 23–39. Ayeni, D. O., & Afolabi, J. O. (2020). Tax revenue, infrastructural development and economic growth in Nigeria (1981–2018). Munich Personal RePEc Archive . https://mpra.ub.uni-muenchen.de/99464/ Bukie, E., & Adejumo, T. O. (2013). Effect of tax revenue on economic growth in Nigeria. International Journal of Business and Social Research, 3(9), 105–120. Chude, D. I., & Chude, N. P. (2015). Impact of company income tax on the profitability of companies in Nigeria: A study of Nigerian Breweries. European Journal of Accounting, Auditing and Finance Research, 3(8), 1–11. Ekeocha, P. C. (2014). Modelling the impact of tax revenue on Nigeria’s economic growth. International Journal of Economics and Finance, 6(6), 1–10. Ezekwere, U., Fidelis, A., & Andrew, E. (2021). Taxation and Nigeria’s economy: A regression analysis. Journal of Accounting and Taxation, 13(2), 85–95. Grey, E. E., & Agboro, O. E. (2014). Determinants of public expenditure on education and its impact on economic growth in Nigeria. African Journal of Economic Policy, 21(2), 77–92. Ibadin, P. O., & Eiya, O. (2013). Tax evasion and tax avoidance in Nigeria: The missing link in revenue generation. European Journal of Business and Management, 5(3), 1–7. Ihenyen, C. J., & Mieseigha, E. G. (2014). Taxation as an instrument of economic growth: The Nigerian perspective. Information and Knowledge Management, 4(12), 49–53. James, S. A. (2018). Taxation and economic development in Nigeria. Lagos: University of Lagos Press. Nwanakwere, J. T. (2020). Tax and economic growth in Nigeria: An ARDL approach. Journal of Ekonomi & Studies Pembangunan, 22(1), 58–70. https://doi.org/10.18196/jesp.v22i1.6470 Ojochogwu, O., & Ojeka, S. A. (2012). Tax policy and the growth of SMEs: Empirical evidence from Nigerian SMEs. International Journal of Business and Social Science, 3(7), 200–209. Okafor, R. G. (2012). Tax revenue generation and economic development in Nigeria (1981–2007). European Journal of Business and Management, 4(19), 49–57. Okoli, T. C., & Afolabi, B. (2019). Effect of tax policy on economic growth in Nigeria: Empirical analysis. Journal of Economics and Development Studies, 7(2), 45–55. Okoro, H. A. (2019). Company income tax and infrastructural development in Nigeria: An empirical analysis. Journal of Accounting and Financial Management, 5(2), 112–125. Olaoye, C. O., & Aguguom, C. (2017). Taxation and economic development in Nigeria: An empirical analysis. International Journal of Management and Social Sciences Research, 6(5), 1–10. Olaoye, S. A. (2009). An empirical analysis of the impact of taxation on Nigerian economic growth.(Unpublished master’s thesis). Department of Economics, Obafemi Awolowo University, Ile-Ife. Olatunji, O. C. (2009). A review of value added tax administration in Nigeria. The Nigerian Accountant, 42(1), 45–50. Olatunji, O. C., & Nkechi, O. E. (2009). Effect of corporate taxation on the profitability of firms in Nigeria. Journal of Economics and Behavioral Studies, 11(1 J), 191–201. https://doi.org/10.22610/jebs.v11i1(J).2759 Omankhanlen, A. E., Joshua, O. O., Emmanuel, I. O., & Uchechukwu, E. O. (2014). Government expenditure on human capital development and its implication for economic growth in Nigeria. International Journal of Economics and Business Research, 8(3), 231–245. Onoh, L. M. (2013). The impact of Value Added Tax on Nigerian economic growth (1994– 2010) [Unpublished undergraduate project]. Caritas University, Enugu, Nigeria. Onukelobi, P. C., Okwuego, S. P., & Chidiebere, J. O. (2025). Effect of tax revenue on economic growth in Nigeria: Evidence from VAT, CIT, and CED (2004–2024). International Journal of Economics and Financial Management, 10(3), 72–92. Owolabi, S. A., & Okwu, A. T. (2011). Empirical evaluation of contribution of value added tax to development of Lagos State economy. Middle Eastern Finance and Economics, 9, 24–34. Piketty, T. (2014). Capital in the twenty-first century. Cambridge, MA: Harvard University Press. Puskwet, I. F. (2018). Taxation and the growth of the Nigeria economy. Journal of Economics and Public Finance, 4(2), 99–114. Sallau, A. M., Mahmoud, I., & Shamsudeen, L. S. (2023). Impact of tax reforms on economic development in Nigeria (2014–2022). African Journal of Business and Economic Development, 7(7), 119–135. Stiglitz, J. E. (2012). The price of inequality: How today’s divided society endangers our future. New York, NY: W.W. Norton & Company. Sunny‐Igwe, F. U., & Igwe, S. R. (2024). Tax revenue and sustainable infrastructural development in Nigeria (2012–2022). Nigerian Academy of Management Journal, 19(1), 122–134. Waris, A. (2013). Tax and development: Solving Kenya’s fiscal crisis through human rights. Nairobi: LawAfrica Publishing. Worlu, C. N., & Emeka, N. (2012). Tax revenue and economic development in Nigeria: A macroeconomic approach, 8(6), 173–179. Zucman, G. (2019). The triumph of injustice: How the rich dodge taxes and how to make them pay. New York, NY: W.W. Norton & Company.

More Articles from INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT

Bridging Legal, Financial, and Data Governance in Enterprise AI: Emerging Trends

Author: Funmilayo Ashore-Onisemo, Ebehiremen Faith Iziduh, Uchechi Mary-Linda Unamma, Ifeanyichukwu Jeffrey Okwesa

Macroeconomic Policies and Economic Stability in Nigeria

Author: Abel-Tariah Emmanuel Onate, Okon, Ekanem Nsikhe, Nwenyi Francis Onwe

Determinants of Bank Liquidity in Nigeria

Author: Nelson Johnny Ebifemo-ere Stephen