Trend Analysis of the Link Between Tax Reveneue, Non-Tax Revenue and Public Expenditure in Nigeria

Abstract

Objective – The paper is aimed at examining the relationship between government tax revenue, non-tax revenue and government expenditure in Nigeria. Design/methodology – Quantitative research design was employed. Secondary data were collected from Central Bank of Nigeria statistical bulletin, World Bank, World Data Atlas and Federal Inland Revenue Service. The study covers the period of 2010 to 2018. Meanwhile descriptive statistics was used to analyzed the data. Results – The findings of the study discovered that, there is a relationship between government revenue and government expenditure, and the Nigerian government revenue and expenditure is in line with the spend-and-revenue hypothesis. That is government revenue only respond to previous changes in expenditure. Thus, government is expected to generate enough tax revenue to enable it meet government expenses as revenue from oil is decreasing. This signifies that whenever there is high government expenditure, it is required that government must raise higher revenue, and in Nigeria, government expenditure is always higher than the revenue resulting to budget deficit. In addition, tax revenue was found to have been increasing even though at a slower rate. Limitation/Suggestion - The study recommends that Nigerian government should cut down current expenditures on wages, acquisition of goods and services that are unnecessary and increase capital expenditure. Increase in capital expenditures on education, infrastructures and health care will boast the economic activity and which will in turn increases government tax revenue.

An Empirical Evidence of the Impact of Government Tax Revenue on Nigerian Public Debt

“…And suggest that the federal government should use superior technique in negotiating debt and fixed interest payment varying amortization schemes and look for multiyear rescheduling instead of yearly basis. Contrarily, Kaka & Ado (2020) discovered an insignificant and positive effect of national debt on Nigerian foreign reserves. Ko (2019) examines the long-run and short-run impact of an increase in budget deficits and increase in income tax rates on the economy.…”

“…Literature Review Public debt is the sum or total national debt a government of a nation owed inside and outside the country (Kaka & Ado, 2020). In order words, public debt can be referred to as national debt, which is the total figure of financial obligations owed by the government from its citizens, foreign governments, or international financial institutions like International Monetary Funds, African Development Bank and International Bank for Reconstruction and Development.…”