Determinants of Taxable Capacity in Nigeria

Abstract

This study is centered on the determinants of taxable capacity in Nigeria, with taxable capacity viewed as the ability of the taxed person to bear the burden of the tax in relation to their source of income without experiencing a reduction in standard of living, or margin of profit and investment in the case of firms. The study employed desk survey research design, and data obtained from secondary sources and analysis conducted using the ordinary least square technique. The results from the regression analysis and the test of hypotheses revealed that the relationship between inflation and taxable capacity in Nigeria was negative and statistically insignificant. Also, the results showed that both the degree of economic openness and the level of economic development positively and significantly affected taxable capacity in Nigeria. The study recommended that the Nigerian government should create an enabling environment that will facilitate international trade and provide the necessary facilities for the efficient and effective administration of taxes on the income generated from the global market as these will go a long way in providing revenue for the government.

Spatial variability of the predictors of government tax revenue in Nigeria

“…In a similar study, Ikhatua and Ibadin (2019) showed that tax revenue is determined by agricultural sector productivity, manufacturing sector productivity, capital flight and trade openness using the autoregressive distributed lag model. Moreover, the study of Bassey and Efiong (2018) revealed that the inflation rate has a negative effect on tax revenue generation, while the degree of economic openness and the level of economic development are positively related with tax revenue in Nigeria.…”