Tax Revenue Volatility and Its Implication on the Nigeria Economic Growth

Abstract

The study examined the analysis of the impact of tax revenue (TR) volatility on economic growth (EG) in Nigeria between the periods of 1994-2021, which is a period of 28years. This was done using the measures TR volatility, namely; Petroleum Profit Tax Volatility (PPTV), Value Added Tax Volatility (VATV), Company Income Tax Volatility (CITV) and Custom and Excise Duties Volatility (CEDV) in relation to economic growth proxied with Gross Domestic Product (GDP). The data was sourced from the CBN Statistical Bulletin and Annual Report and analyzed with descriptive statistics, correlation matrix, unit root test, Auto-regressive Distributed Lag (ARDL) Bound Co-integration test, and ARDL Co-integrating and Long form. The findings showed that PPTV has a p-value of 0.0089 and a p-value of 0.0051 on the short and long run (S&LR) respectively. Hence, PPTV had a considerable effect on GDP in the S&LR; VATV has a p-value of 0.0067 and 0.0001 both on the S&LR. Thus, VATV had a considerable effect on GDP in the S&LR; CITV has a p-value of 0.1838 and a p-value of 0.1892 in the S&LR respectively. Thus, CITV had an inconsequential effect on GDP in the S&LR and CEDV has p-values of 0.0253 and 0.0021 both on the S&LR. Hence, CEDV has a considerable effect on GDP in the L&SR. It is evident that measures of tax revenue volatility used have mixed effects of RGDP. It is only PPTV, VATV and CEDV that have considerable effects on GDP in S&LR while CITV exerts inconsequential effect on RGDP in S&LR. Hence, the study concluded that TR volatility had considerable effects on EG. It is advised that government should restructure the country's petroleum industry by stepping up efforts to process crude oil and solely exporting processed oil to the global market.
 Keywords: Tax, Revenue, Volatility, Inconsequential Effect, Considerable Effects.