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Impact of Tax Reforms on Economic Growth in Nigeria

Inyada Sunday Joseph, Obafemi Olatokunbo Tunde, Sanni Abdulraheem

Abstract

The main objective of the paper is to evaluate the impact of Tax Reforms on Economic Growth in Nigeria. This study adopts an ex-post facto research design, using secondary data to compare the economic growth of Nigeria before and after the implementation of tax reforms. The data, sourced from the Central Bank of Nigeria, covers two distinct periods: before the reforms (1990-2006) and after the reforms (2007-2025). To analyze this data, the study employs a t-test, which helps determine if there is a significant difference in the average economic growth between the two periods. The results of the Paired Sample T-Test reveal a significant decline in revenue following the reform, with a marked drop from ₦88,352.33 in the pre-reform period to ₦3,654.44 in the post- reform period. The statistical analysis, supported by a high t-statistic of 4.55 and an extremely low p-value of 0.0001, confirms that the observed difference is not due to random chance, but rather points to a real and substantial shift in revenue outcomes following the reform. These findings suggest that the reform may have had unintended negative consequences on revenue, at least in the short term. This decline aligns with theories on the disruptive effects of large-scale policy changes, which can lead to market disruptions and temporary losses as systems adjust to new frameworks. While such results may be concerning, they do highlight the importance of understanding the complexities and potential downsides of reforms. The study recommended that it is critical to conduct a deeper analysis into the specific causes behind the significant revenue decline. Factors such as changes in policy, external economic conditions, or the manner in which the reform was implemented could have contributed to the downturn.

Keywords

Economic growthTax ReformsImpactGovernmentFiscal Policy

References

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