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Impact of Tax Policy Structure and Revenue Mobilization Capacity on Economic Growth in Nigeria

Nkeiruka Chinyere Forcha-Chigbo, PhD, Obonofiemro Godwin, Sunny-Anidi Oghenetega

Abstract

This study examined the impact of tax policy structure and revenue mobilization capacity on economic growth in Nigeria, using annual data for 1995 to 2024 on real GDP growth rate , value added tax rate , company income tax rate , and non-oil revenue share of total revenue . Data were sourced from the Central Bank of Nigeria Statistical Bulletin, Federal Inland Revenue Service publications, and the World Bank World Development Indicators, and were extracted with a structured template that recorded series definitions, units, base years, and metadata. Cross source triangulation resolved discrepancies, and proportional linking harmonized definitional shifts. The analysis adopted an ex post facto, quantitative time series design and employed Ordinary Least Squares in E Views 9.0 for baseline inference. Stationarity was assessed with panel and Fisher type unit root tests, and diagnostic checks covered multicollinearity, heteroskedasticity, autocorrelation, residual normality, and functional form. The results indicated that VATR had a positive and statistically significant association with RGDPG, with a coefficient of 0.2622 and a p value of 0.0021. CITR was positive and significant, with a coefficient of 0.1685 and a p value of 0.0055. NORSTR was positive and significant, with a coefficient of 0.1538 and a p value of 0.0185. The model explained a meaningful share of the variation in RGDPG and was jointly significant. These findings were consistent with the view that broad based and predictably administered taxes expanded fiscal space for productivity enhancing public investment and strengthened macro credibility, while a higher non-oil revenue share reduced reliance on volatile oil receipts and supported steadier growth paths. Policy implications included reinforcing VAT productivity through digital administration and efficient refunds, maintaining simple and predictable IJEFM corporate taxation while lowering compliance costs, and raising the non-oil revenue share through sub-national harmonization and transparent medium-term revenue strategies.

Keywords

Value Added Tax RateCompany Income Tax RateAnd Non-Oil Revenue Share of Total Revenue and Real GDP Growth Rate

References

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