Tax Revenue on Economic Growth in Nigeria (2007–2017)
AbstractThe contribution of taxation to any economy globally cannot be overemphasized. Apart from the revenue function it performs for the government, it is also used to assist the national government to achieve the country’s macro-economic objectives in the areas of fiscal and monetary policies. Past documentations have revealed that revenue from taxes in Nigeria has a high impact on its economic growth which is clearly seen by the social amenities provided. Thus the main objective of this study is to explore the relationship between tax revenue and economic growth and development in Nigeria. In summary, the simple regression analysis shows that about 75% variations in GDP can be attributed to changes in PPT; also, Value Added Tax (VAT) was discovered to be responsible for about 95% changes in GDP. Value Added Tax shows a positive relationship with the Gross Domestic Product (β4 = 0.884017). Negative shows that the probability of this result occurring by chance was less than 0.05 (0.0000) and hence VAT is statistically significant at P < 0.05 level. The multiple regression analysis through long run estimation indicated that in the long run, CIT and CED have negative effects on GDP and PPT and VAT have positive effects on GDP. The study concluded that tax revenue combined has a significant effect on the economic growth of Nigeria, although Companies Income Tax (CIT) and Custom Excise Duties (CED) have not contributed positively to economic growth of this nation over the period of study, it is therefore recommended that tax Clearance Certificates and other tax documents used in government transactions should be referred back to the relevant revenue authority for authentication.
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