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Tax Revenue and Government Capital Expenditure in Nigeria

Samuel Dibiah PhD Ogechi Chinenye Onyegbula

Abstract

This study examined the relationship between tax revenue components and government capital expenditure on social services in Nigeria from 2011 to 2023. Specifically, it investigated the effects of Company Income Tax, Value Added Tax, Hydrocarbon Tax, and Excise Duty Tax on social service spending. The study adopted an ex-post facto research design, utilizing secondary data obtained from the Federal Inland Revenue Service, Budget Office of the Federation, and Central Bank of Nigeria statistical bulletins. Data analysis employed descriptive statistics and multiple regression techniques using EViews to determine the strength, direction, and significance of relationships between tax revenue streams and capital expenditure. Findings revealed that company income tax had a positive and statistically significant impact on government capital expenditure, highlighting its critical role in providing a stable fiscal base for funding social services. Conversely, value added tax, hydrocarbon tax, and excise duty tax did not exhibit significant effects, reflecting challenges such as revenue volatility, collection inefficiencies, and smaller contributions relative to company income tax. The study concluded that enhancing corporate tax administration, stabilizing revenue sources, and diversifying the tax base are essential to ensure predictable and sustainable financing of social infrastructure in Nigeria.

Keywords

Tax RevenueGovernment Capital ExpenditureCompany Income TaxHydrocarbon TaxValue Added Tax.

References

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