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Impact of New Tax Act on the Nigerian Economic Growth

Elekima Ambiye Okonte

Abstract

The study examines the impact of new tax act on the Nigerian economic growth. The study employed annual time series data spanning the years from 2022-2025 (Q1 to Q10). Value Added Tax and Capital Gain Tax were used as a proxy for tax act and Real Gross Domestic Product as a proxy for economic growth. To avoid spurious results, stationarity of the data collected were tested using the Augmented Dickey Fuller model. The study is based on the Ex-post facto research design. The population of this study consisted of all manufacturing firms listed on the Nigeria stock Exchange, using quarterly data from 2022 to 2025 (Q1- Q10). The study population was 121 Manufacturing companies listed on the Nigerian Stock Exchange. The Purposive Sampling Technique was utilized in this study to determine the sample size. The sample size for this study was nine (9) manufacturing firms listed on the Nigerian Stock Exchange. These manufacturing firms were selected based on the fact that they contribute towards the Nigerian economy growth and development, and they are among the top 20 of the consumable manufacturing firms; also, because of the availability of their quarterly accounting records and annual financial reports from 2022(Q1) to 2025(10). Data were analyzed using the Auto-Regressive Distributed Lags and the Ordinary Least Square via the use of E-views 10). Value Added tax act has positive relationship with economic growth; the impact is, however, instructive from the findings that while tax act in general have a significant impact on economic growth and stability. Besides, this study revealed that Capital Gain act has no significant impact on the Nigerian economic growth. The challenges issues in the Nigerian tax system are surmountable through proper system of tax act. Based on the conclusion, the study recommends that although increasing the VAT rate may sound unpopular in a country ravaged by poverty and hardship, however, a moderate increase (to say, 7.5%), as has been canvassed by several commentators, would boost government’s revenue profile. Also, it is recommended that the administration of CGT should be improved upon with focus directed towards reducing evasion and avoidance.

Keywords

Tax ActAct in Value Added TaxAct in Capital Gain TaxEconomic Growth

References

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