Tax Revenue and Economic Development in Nigeria

Abstract

This study investigated the impact of taxation on economic development of Nigeria from 2003 to 2017.Vector Error Correction Model (VECM), Augmented Dickey-Fuller (ADF) unit root test, Autoregressive Distributed Lag (ARDL) bounds test, Jarque-Bera Normality Test and Eigenvalue stability condition were utilised in this study. The study revealed that companies’ income tax, petroleum profit and value added tax have a long run impact of -0.225(p-value=0.000),-0.0005 (p-value=0.699), and 0.211(p-value=0.000) respectively on the economic development of Nigeria.It was concluded that taxation has a significant long run relationship with Nigeria’s economic development. The study recommended that the government should not increase companies’ income tax rate because it is detrimental to the economic development of the country in the long run, instead the government should increase the value added tax because it has the potentiality to improve economic development of Nigeria. Also, the government should not concentrate effort on petroleum profit tax as it not significant on economic development of the country.

Tax Revenue and Economic Development in Nigeria

“…This is in line with the a priori expectation. The finding is in agreement with that of many others including Okeke et al (2018), Ufoegbu et al (2016), Nwakanma andNnamdi (2013), andEwa et al (2020); but at variant with the findings of authors such as Olaoye et al (2019), andIdeh (2019). Since economic development is proxy by the human development index (HDI), revenue from petroleum profit tax raised per capita income, and increased literacy rate and life expectancy in Nigeria within the period under study.…”

“…They suggested that the country's tax base be widened to raise more money through taxes. The effect of taxes on Nigeria's economic development from 2003 to 2017 was examined by Olaoye et al (2019). The HDI served as a stand-in for economic development.…”

Stamp Duty Tax and Growth of Economy: Evidence from Nigeria

“…Furthermore, the results of the stamp duty variable show a significant negative effect on the economic growth of Nigeria. The result is confirmation that taxation is still a powerful socio-political and economic tool for economic growth and national prosperity [25] . Tax evasion is a global concern, but it appears to be common when compared to the prevalence of corrupt practices.…”

“…Their findings revealed that in Nigeria, longrun taxes on economic growth are more pronounced than short-run taxes [24] . From 2003 to 2017, the study investigated the impact of taxation on Nigerian economic development [25] . They employed the Vector Error Correction Model (VECM), the Augmented Dickey-Fuller (ADF) unit root test, the Autoregressive Distributed Lag (ARDL) bounds test, the Jarque-Bera Normality Test, and the Eigenvalue Stability Condition Test.…”

Effect of the Tax Rate on Economic Growth: A Panel Analysis

“…dev is 0.068755, T-value is 1.130473, and probability value is 0.3405, which explains an indirect and insignificant relation between tax revenue and GDP in Kenya (Amin et al, 2021). [ 23 ] value is -0.979269, Std.dev value is 0.009127, t-value is 129.2094 and probability values is 0.0000. The coefficient value of FDI is 0.451639, Std.…”