International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Analyzing the impact of value added tax (vat) on economic growth in nigeriaAlexander Decker
This document summarizes a study that analyzes the impact of value added tax (VAT) on economic growth in Nigeria from 1994 to 2010 using vector autoregression (VAR) modeling. The study uses quarterly time series data for GDP, VAT revenues, and oil revenues. Unit root tests show the variables contain unit roots and are non-stationary in levels but stationary in first differences. The VAR model is then estimated in levels to capture dynamic relationships between the variables. Impulse response functions and forecast error variance decompositions from the VAR imply that VAT has a positive impact on economic growth in Nigeria, accounting for about 50% of variations in real economic activity over time. The study concludes that Nigeria should continue implementing VAT policies to help
Revenue Implications of Nigeria’s Tax System in NigeriaMoses Oduh
This document analyzes the properties of Nigeria's tax system, specifically the bases of company income tax, value added tax, and personal income tax. It finds that the bases are not stable and persistent, being volatile. The bases of company income tax and personal income tax are more sensitive to economic cycles, while the value added tax base is not sensitive. This supports Nigeria's recent tax policy reform of shifting focus from direct to indirect taxation, as VAT revenue will be less affected during economic downturns and help stabilize government budgets.
IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN N IGERIAIyanda Abdulwasiu
This document is a research project on the impact of personal income tax on revenue generation in Nigeria, using Lagos Government as a case study. It was submitted by Iyanda Abdulwasiu Ahmed to the Department of Accountancy at Kwara State Polytechnic in partial fulfillment of the requirements for a National Diploma in Accountancy. The research project contains certification, dedication, acknowledgements, table of contents, and 5 chapters that discuss the background of the study, literature review, research methodology, data analysis and findings, and conclusions and recommendations.
An Assessment of revenue generation drive of Lagos state government through e...Jeremy Williams
Effective taxation is critical for generating government revenue but many nations struggle with administration and compliance issues. In Lagos State, low oil prices reduced funds, increasing the urgency of boosting internally generated revenue. This study examines how Lagos State improved tax administration and the impact on revenue, citizens, and development. It analyzes the state's efforts to transform its revenue base and infrastructure for its growing population through more efficient revenue collection.
Impact of Taxes on Revenue Generation in Nigeria (A Study of Federal Government)ijtsrd
This paper investigated the effect of taxes on revenue generation in Nigeria from 1981 to 2016, a period of thirty five 35 years and the data for the analysis were sourced from Central Bank of Nigeria's CBN, 2016 Statistical Bulletin. The variables used include total federally collected revenue as a proxy for revenue generation, labour, gross capital formation, company income tax, petroleum profit tax, personal income tax, value added tax, custom and excise tax, direct tax and indirect tax. Fully modified ordinary least squares method FMOLS was employed to determine the direction and the magnitude of impacts. Based on the effect of direct tax on revenue generation in Nigeria, both company income tax and personal income tax boost revenue generation in Nigeria while petroleum profit tax discourage revenue generation in Nigeria. Also, model on the effect of indirect tax on revenue generation showed that the two variables used as indirect tax variable value added tax and custom and excise tax have positive and significant effect on revenue generation in Nigeria. Lastly, the researchers found out that the estimated result on the effect of direct and indirect tax on revenue generation in Nigeria showed that indirect tax lead to revenue generation in Nigeria while direct tax does not and this is so because most people pay indirect tax in Nigeria than direct tax. Also, tax evasion and avoidance are very minimal in indirect tax and this lead to more revenue which encourage economic growth in Nigeria. The researchers recommended that it is important that efficient and effective tax policy be implemented to ensure that enough revenue is generated for growth purposes like strict penalties should be meted to people who avoid and evade tax payments. Government should base her taxes on indirect tax because this will not create any burden on the citizen and in this way, it will lead to growth. Olaleye John Olatunde | Salome Olabimpe Ajayi "Impact of Taxes on Revenue Generation in Nigeria (A Study of Federal Government)" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-4 | Issue-1 , December 2019, URL: https://www.ijtsrd.com/papers/ijtsrd29514.pdfPaper URL: https://www.ijtsrd.com/economics/other/29514/impact-of-taxes-on-revenue-generation-in-nigeria-a-study-of-federal-government/olaleye-john-olatunde
Tax administration and revenue generation of lagos state government, nigeriaAlexander Decker
This document summarizes a research study on tax administration and revenue generation in Lagos State, Nigeria. The study examined the effectiveness of tax assessment, collection, and remittance systems. A survey was administered to 130 civil servants involved in tax administration across 5 local government areas. The findings showed that the tax administration system in Lagos State was not totally efficient and that improvements could help boost revenue generation. Specifically, the study found that tax administration impacts the revenue collected by the government and that there is a significant relationship between tax administration policies and laws. The document recommends that Lagos State implement a improved tax system to enhance administration and collections, possibly involving private organizations.
Tax system in nigeria – challenges and the way forwardAlexander Decker
This document discusses challenges facing Nigeria's tax system. It outlines several key challenges: lack of statistical tax data, inability to prioritize tax efforts, poor tax administration due to understaffing and lack of training, and multiplicity of taxes. The document examines these challenges in more detail and argues that addressing these issues is important for establishing an efficient and effective tax regime in Nigeria.
Analyzing the impact of value added tax (vat) on economic growth in nigeriaAlexander Decker
This document summarizes a study that analyzes the impact of value added tax (VAT) on economic growth in Nigeria from 1994 to 2010 using vector autoregression (VAR) modeling. The study uses quarterly time series data for GDP, VAT revenues, and oil revenues. Unit root tests show the variables contain unit roots and are non-stationary in levels but stationary in first differences. The VAR model is then estimated in levels to capture dynamic relationships between the variables. Impulse response functions and forecast error variance decompositions from the VAR imply that VAT has a positive impact on economic growth in Nigeria, accounting for about 50% of variations in real economic activity over time. The study concludes that Nigeria should continue implementing VAT policies to help
Revenue Implications of Nigeria’s Tax System in NigeriaMoses Oduh
This document analyzes the properties of Nigeria's tax system, specifically the bases of company income tax, value added tax, and personal income tax. It finds that the bases are not stable and persistent, being volatile. The bases of company income tax and personal income tax are more sensitive to economic cycles, while the value added tax base is not sensitive. This supports Nigeria's recent tax policy reform of shifting focus from direct to indirect taxation, as VAT revenue will be less affected during economic downturns and help stabilize government budgets.
IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN N IGERIAIyanda Abdulwasiu
This document is a research project on the impact of personal income tax on revenue generation in Nigeria, using Lagos Government as a case study. It was submitted by Iyanda Abdulwasiu Ahmed to the Department of Accountancy at Kwara State Polytechnic in partial fulfillment of the requirements for a National Diploma in Accountancy. The research project contains certification, dedication, acknowledgements, table of contents, and 5 chapters that discuss the background of the study, literature review, research methodology, data analysis and findings, and conclusions and recommendations.
An Assessment of revenue generation drive of Lagos state government through e...Jeremy Williams
Effective taxation is critical for generating government revenue but many nations struggle with administration and compliance issues. In Lagos State, low oil prices reduced funds, increasing the urgency of boosting internally generated revenue. This study examines how Lagos State improved tax administration and the impact on revenue, citizens, and development. It analyzes the state's efforts to transform its revenue base and infrastructure for its growing population through more efficient revenue collection.
Impact of Taxes on Revenue Generation in Nigeria (A Study of Federal Government)ijtsrd
This paper investigated the effect of taxes on revenue generation in Nigeria from 1981 to 2016, a period of thirty five 35 years and the data for the analysis were sourced from Central Bank of Nigeria's CBN, 2016 Statistical Bulletin. The variables used include total federally collected revenue as a proxy for revenue generation, labour, gross capital formation, company income tax, petroleum profit tax, personal income tax, value added tax, custom and excise tax, direct tax and indirect tax. Fully modified ordinary least squares method FMOLS was employed to determine the direction and the magnitude of impacts. Based on the effect of direct tax on revenue generation in Nigeria, both company income tax and personal income tax boost revenue generation in Nigeria while petroleum profit tax discourage revenue generation in Nigeria. Also, model on the effect of indirect tax on revenue generation showed that the two variables used as indirect tax variable value added tax and custom and excise tax have positive and significant effect on revenue generation in Nigeria. Lastly, the researchers found out that the estimated result on the effect of direct and indirect tax on revenue generation in Nigeria showed that indirect tax lead to revenue generation in Nigeria while direct tax does not and this is so because most people pay indirect tax in Nigeria than direct tax. Also, tax evasion and avoidance are very minimal in indirect tax and this lead to more revenue which encourage economic growth in Nigeria. The researchers recommended that it is important that efficient and effective tax policy be implemented to ensure that enough revenue is generated for growth purposes like strict penalties should be meted to people who avoid and evade tax payments. Government should base her taxes on indirect tax because this will not create any burden on the citizen and in this way, it will lead to growth. Olaleye John Olatunde | Salome Olabimpe Ajayi "Impact of Taxes on Revenue Generation in Nigeria (A Study of Federal Government)" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-4 | Issue-1 , December 2019, URL: https://www.ijtsrd.com/papers/ijtsrd29514.pdfPaper URL: https://www.ijtsrd.com/economics/other/29514/impact-of-taxes-on-revenue-generation-in-nigeria-a-study-of-federal-government/olaleye-john-olatunde
Tax administration and revenue generation of lagos state government, nigeriaAlexander Decker
This document summarizes a research study on tax administration and revenue generation in Lagos State, Nigeria. The study examined the effectiveness of tax assessment, collection, and remittance systems. A survey was administered to 130 civil servants involved in tax administration across 5 local government areas. The findings showed that the tax administration system in Lagos State was not totally efficient and that improvements could help boost revenue generation. Specifically, the study found that tax administration impacts the revenue collected by the government and that there is a significant relationship between tax administration policies and laws. The document recommends that Lagos State implement a improved tax system to enhance administration and collections, possibly involving private organizations.
Tax system in nigeria – challenges and the way forwardAlexander Decker
This document discusses challenges facing Nigeria's tax system. It outlines several key challenges: lack of statistical tax data, inability to prioritize tax efforts, poor tax administration due to understaffing and lack of training, and multiplicity of taxes. The document examines these challenges in more detail and argues that addressing these issues is important for establishing an efficient and effective tax regime in Nigeria.
International Journal of Humanities and Social Science Invention (IJHSSI)inventionjournals
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
An evaluation of the contribution of value added tax (vat) to resource mobili...Alexander Decker
This document evaluates the contribution of Value Added Tax (VAT) to resource mobilization in Nigeria. It finds that VAT has significantly contributed to resource mobilization and capital formation based on regression analyses showing strong positive relationships between VAT and key economic indicators like Real Gross Domestic Product, Current Revenue, and Internal Revenue. The analyses show VAT individually and significantly impacts these indicators based on t-statistic and F-statistic tests. It concludes that VAT is an ideal form of taxation in Nigeria's tax system and has become more important as a source of government revenue.
Analysis of tax morale and tax compliance in nigeriaAlexander Decker
This document analyzes tax morale and tax compliance in Nigeria. It discusses how tax morale, or the intrinsic motivation to pay taxes, affects tax compliance. The study aims to determine the effect of tax morale on taxpayers' compliance with tax policies in Nigeria. It reviews literature on factors that influence tax compliance, such as trust in government, social and cultural norms, and confidence in the legal system. The document presents theories on intrinsic motivation, ipsative possibilities, and deterrence to explain tax morale and compliance. It provides context on Nigeria's tax system and history of taxation. The results of the study showed relationships between tax compliance and factors like tax morale, trust in government, and social/cultural norms. It recommends strengthening taxpayer services and
Determinants of tax compliance behavior in ethiopia the case of bahir dar cit...Alexander Decker
This document examines the determinants of tax compliance behavior in Ethiopia, specifically in Bahir Dar City. It used a survey of 201 taxpayers to analyze factors like perception of government spending, fairness of the tax system, penalties, financial constraints, policy changes, and social influences. The results found that these factors significantly affected tax compliance, but gender and audit probability did not. Additionally, older taxpayers were found to comply less if they felt the tax system was unfair or recent policy changes were unfavorable. In summary, it identified several perceptual and situational factors that influence tax compliance in Bahir Dar City, though not demographic factors like gender.
Taxation, Private Fixed Domestic investment Behaviour and Zimbabwe’s Economic...AJHSSR Journal
This document summarizes a research paper that examines the relationship between taxation, private fixed domestic investment, and economic growth in Zimbabwe from 1998 to 2015. The paper finds that taxation revenue channeled towards productive public expenditures like infrastructure can stimulate private investment. However, Zimbabwe's high taxes have discouraged savings and investment, despite evidence that taxes can be efficient and equitable when properly implemented. The primary challenge for policymakers is devising tax rules that lower evasion and corruption while adequately protecting the tax base and lessening the burden on firms.
Effect of Tax Reforms on Corporate on Nigerian Economic Developmentijtsrd
This study assessed the effect of tax reforms on productivity in Nigeria over the period of 1992 to 2019. It examined the impact of value added tax (VAT) and company income tax (CIT) on GDP per capita as a measure of productivity. The study employed descriptive statistics, Pearson correlation, and regression analysis to analyze the time series data obtained from various sources. The study found that VAT and CIT had a substantial negative influence on GDP per capita in Nigeria, whereas petroleum profit tax had a significant positive effect. It was recommended that the government should diversify the economy to increase the overall tax revenue base and promote more development.
An investigation of the effect of vat on revenue profiles of south western ni...Alexander Decker
This document summarizes a study that examined the effect of Value Added Tax (VAT) on the revenue profiles of state governments in Southwestern Nigeria from 2002 to 2011. The study used secondary data from approved budgets of five states. Panel regression analysis found that VAT had a positive and significant relationship with state revenues. The study concluded that increasing consumption through poverty alleviation could increase VAT revenues for states by boosting the goods and services subject to VAT.
Effect of vat and tax on economy an analysis in the context of bangladesh.Alexander Decker
This document summarizes a research paper on the effects of taxes and VAT on the economy of Bangladesh. It provides background on VAT and how it has replaced sales taxes in Bangladesh. It discusses the country's current tax policies, including income tax rates that are progressive up to 25% and a uniform 15% VAT rate. It analyzes how the tax system affects people in Bangladesh, noting the heavy reliance on indirect taxes results in a small number of taxpayers shouldering the burden. The narrow tax base and exemptions are also issues. In conclusion, broadening the tax base is desirable but agricultural income exemptions need reconsideration given many affluent people claim agricultural income to avoid taxes.
Position paper domestic revenue mobilizationSalia Adamu
This paper is targets the Government revenue authorities and finding innovative ways of raising revenue through the informal sector workers. All the revenue agencies are intensifying more revenue collection through old tax collection methods. This is done usually through the easy ways of PAYE, VAT and corporate taxes collection. The informal sector worker which account for 70% of the workforce are the least targeted for taxation. In view of growing public expenditure and reduction in annual budgetary support from development partners, there is the need to intensify domestic revenue generation through innovative strategies and capturing more informal sector workers.
Deterrent tax measures and tax compliance in nigeriaAlexander Decker
This document summarizes a study that examines the effects of deterrent tax measures on tax compliance in Nigeria. It begins with an introduction that outlines the importance of taxes in generating government revenue. It then reviews Nigeria's existing tax policies and reforms, discussing the country's tax administration system. The study uses a regression analysis of survey responses to test hypotheses about the relationship between deterrent tax measures and compliance. The analysis finds that Nigeria's existing deterrent measures are inadequate and have not promoted compliance. It also finds that fostering voluntary compliance and taxpayer morale would enhance tax compliance. The study recommends that Nigerian revenue authorities adopt approaches to encourage voluntary compliance and appropriately sanction defaulters.
This document summarizes a research paper that studied the influence of taxpayer awareness and tax morale on tax evasion in Bandung, Indonesia. The study used a survey questionnaire to collect data from 436 taxpayers. It analyzed the data using path analysis and found that both taxpayer awareness and tax morale partially and simultaneously had a significant negative effect on tax evasion. The study concluded that increasing taxpayer awareness and tax morale can reduce levels of tax evasion.
Government accountability and voluntary tax compliance in nigeriaAlexander Decker
This document summarizes a research study that examined the relationship between government accountability and voluntary tax compliance in Nigeria. The study tested the hypothesis that citizens' perceptions of government accountability influence their voluntary tax compliance. The findings supported the hypothesis, indicating that citizens' views of whether the government upholds its obligations to citizens shapes tax morale and voluntary tax compliance. Specifically, if citizens feel tax money is not effectively transformed into public goods, their tax morale decreases, reducing voluntary compliance. The study recommends improving public governance to motivate voluntary compliance and reduce the tax gap.
A parametric debate of value added tax, economic growth and poverty reduction...Alexander Decker
This study examines the relationship between Value Added Tax (VAT) revenue, economic growth, and poverty reduction in Nigeria using time series data from 1994-2012. Two regression models are used. The first finds that VAT revenue has a positive and significant impact on economic growth. The second finds that economic growth has a negative but insignificant impact on poverty reduction. The descriptive statistics show average annual growth rates for GDP, government revenue, VAT, capital expenditure, secondary school enrollment, poverty rate, and labor force. Correlation analysis indicates GDP, government revenue, VAT, and secondary school enrollment are positively correlated, while capital expenditure and poverty rate are negatively correlated with other variables.
Government revenue(Public Fiscal Administration)Suzana Vaidya
The document discusses government revenue and taxation. It defines government revenue as money received by a government from sources like taxes on income, wealth, goods, services, exports/imports, and non-tax sources like profits from state-owned corporations. Revenue is used to fund government services that benefit the public like infrastructure development. The main sources of government revenue are taxes, non-tax revenue, and capital receipts. Taxes are either direct taxes paid directly by individuals/corporations or indirect taxes paid to intermediaries and passed on to consumers. Non-tax revenue comes from sources like dividends, interest, fees, and grants. A good tax system aims to raise sufficient and equitable revenue while minimizing economic burden and incentivizing productivity
India Budget 2018 ...Changing Landscape - An Analysis by K. C. Mehta & Co.Prashant Kotecha
This document provides an overview and summary of the key aspects of the Indian economy based on the Economic Survey of 2017-18. Some of the main points covered in the 3 sentences are:
1) The Economic Survey analyzed the Indian economy using big data from sources like GST, EPFO, ESIC to provide new perspectives on economic indicators and issues like the gender gap.
2) Key findings included that over 30% of non-agricultural jobs were in the formal sector based on social security enrollment, states' prosperity correlated more strongly with international trade than domestic trade, and the agricultural sector is becoming more feminized.
3) The document also summarizes fiscal trends like tax revenue growth and deficits,
Tax Morale and Its Effect on Taxpayers’ Compliance to Tax Policies of the Nig...IOSR Journals
This document discusses a study investigating the effect of tax morale on taxpayers' compliance with tax policies in Nigeria. The study aims to determine how tax morale influences revenue generation. A literature review provides background on Nigeria's tax system and history. The study uses questionnaires to collect primary data, which is then analyzed using statistical software. Five hypotheses are presented regarding the relationships between tax morale, trust in government, social norms, legal systems, and traditional institutions on tax compliance. The results showed tax morale and social norms have a significant positive effect on tax compliance, while legal systems and traditional institutions do not. The study recommends educating taxpayers and future generations on tax obligations and using tax revenues appropriately.
The impact of tax administration(fod)projectjames segun
in many nation which have being having problem in financing there development, who have fail in their tax administration which have reduce their national revenue.
Tax Rate Changes and its Impact on Tax Burden Leading to Tax Evasion Practice...inventionjournals
Tax evasion is the major destruction for any country’s economy. It plays a significant role in the developing country’s economy. Due to tax evasion practices the citizens of the country are getting poor infrastructure facilities. The ending results of tax evasion to the Government is revenue loss, which cause a serious damage and deficit of revenue which leads to lack of public expenditure. The study examines factors that influencing tax evasion practices in India. The survey was conducted with primary data from 110 respondents with five point rating scaled questionnaire. The outcomes of the study reveals that the low quality of service to the public in return for the tax significantly impact the tax evasion practices in India. Furthermore, high impact on tax evasion on variables such as tax system, transparency, fairness and accountability. High level of corruption is also one of the major factors for the tax evasion practices in India. The study recommends necessary steps to be taken in view of the transparency, accountability and corruption in order to gain the public morale and minimize the tax evasion practices in India.
Lado Gurgenidze, former Prime Minister of Georgia, discusses key economic reforms that transformed Georgia since the Rose Revolution in 2003. These include lowering taxes to a flat rate, targeting inflation, removing import tariffs and simplifying business regulations. As a result, Georgia experienced high GDP growth, declining debt, and became one of the freest economies in the world. Gurgenidze argues the sustainability of reforms that are pervasive, permanent, quantifiable and affect citizens' daily lives, such as low flat taxes and ease of business. Reforms at risk of being reversed are niche, complex and non-quantifiable.
The effect of internally generated revenue on economic growthResearchWap
This document discusses the effect of internally generated revenue on economic growth in Lagos State, Nigeria. It begins by defining key terms like revenue, taxation, and economic growth. It then provides background on the development of local governments and reforms increasing their autonomy and responsibilities. However, many state governments are underperforming due to poor finances from low internally generated revenue. This is exacerbated by inflation eroding available funds. The study aims to evaluate the relationship between internally generated revenue and economic growth in Lagos State over 5 years. It establishes objectives, research questions, and hypotheses to test this relationship and the contribution of value added tax.
Taxation: The Instrument of Economic Growth in NigeriaAJHSSR Journal
ABSTRACT: The provision of basic infrastructures are very important to the economic development of a
nation. The extent to which the government is able to provide these amenities is determined by the number of
resources at the government's disposal. The inability of the government to provide these basic amenities have
led to the winding up and relocation of many multinational companies operating in Nigeria to other African
countries. As a result, this study investigated the effects of corporate income tax (CIT) and customs and excise
duty (CED) on economic growth. The study used a descriptive research design, and data from 1971 to 2020
were gathered from the Central Bank of Nigeria (CBN) statistical bulletin and Federal Inland Revenue Service
(FIRS) publicationThe study concluded that the provision of basic infrastructures will boost the economy and
will drive individual taxpayers towards a positive response to tax payments. This will increase the level of tax
compliance and result in additional revenue for the government.This study recommended that the government
should make developmental projects their top agenda item as the availability of infrastructural facilities is a
necessary condition for investment that will grow the economy.
KEYWORDS: Company Income Tax, Custom and Excise Duty, Economic Growth, Gross Domestic Product,
Taxation
Effect of Custom and Excise Duties on Infant Mortality in Nigeriaijtsrd
This study examined the effect of custom and excise duties on infant mortality rate in Nigeria from 2004 2021. The study adopted Ex post Facto research design. Data were extracted from CBN statistical Bulletin. Descriptive statistics was used to analyze the data and the hypothesis was tested with regression analysis via E View 9.0 statistical software. The study indicates that custom and excise duties have a negative but significant effect on infant mortality rate in Nigeria. As a result, the report advised that institutional reforms be implemented at the Department of Customs in order to plug manifest leakages. Tax officials tax collection mechanisms must be free of corruption and embezzlement. If this is not done, the revenue collected may fall short of the target. Oranefo, Patricia C. "Effect of Custom and Excise Duties on Infant Mortality in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-6 | Issue-6 , October 2022, URL: https://www.ijtsrd.com/papers/ijtsrd51941.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/51941/effect-of-custom-and-excise-duties-on-infant-mortality-in-nigeria/oranefo-patricia-c
International Journal of Humanities and Social Science Invention (IJHSSI)inventionjournals
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
An evaluation of the contribution of value added tax (vat) to resource mobili...Alexander Decker
This document evaluates the contribution of Value Added Tax (VAT) to resource mobilization in Nigeria. It finds that VAT has significantly contributed to resource mobilization and capital formation based on regression analyses showing strong positive relationships between VAT and key economic indicators like Real Gross Domestic Product, Current Revenue, and Internal Revenue. The analyses show VAT individually and significantly impacts these indicators based on t-statistic and F-statistic tests. It concludes that VAT is an ideal form of taxation in Nigeria's tax system and has become more important as a source of government revenue.
Analysis of tax morale and tax compliance in nigeriaAlexander Decker
This document analyzes tax morale and tax compliance in Nigeria. It discusses how tax morale, or the intrinsic motivation to pay taxes, affects tax compliance. The study aims to determine the effect of tax morale on taxpayers' compliance with tax policies in Nigeria. It reviews literature on factors that influence tax compliance, such as trust in government, social and cultural norms, and confidence in the legal system. The document presents theories on intrinsic motivation, ipsative possibilities, and deterrence to explain tax morale and compliance. It provides context on Nigeria's tax system and history of taxation. The results of the study showed relationships between tax compliance and factors like tax morale, trust in government, and social/cultural norms. It recommends strengthening taxpayer services and
Determinants of tax compliance behavior in ethiopia the case of bahir dar cit...Alexander Decker
This document examines the determinants of tax compliance behavior in Ethiopia, specifically in Bahir Dar City. It used a survey of 201 taxpayers to analyze factors like perception of government spending, fairness of the tax system, penalties, financial constraints, policy changes, and social influences. The results found that these factors significantly affected tax compliance, but gender and audit probability did not. Additionally, older taxpayers were found to comply less if they felt the tax system was unfair or recent policy changes were unfavorable. In summary, it identified several perceptual and situational factors that influence tax compliance in Bahir Dar City, though not demographic factors like gender.
Taxation, Private Fixed Domestic investment Behaviour and Zimbabwe’s Economic...AJHSSR Journal
This document summarizes a research paper that examines the relationship between taxation, private fixed domestic investment, and economic growth in Zimbabwe from 1998 to 2015. The paper finds that taxation revenue channeled towards productive public expenditures like infrastructure can stimulate private investment. However, Zimbabwe's high taxes have discouraged savings and investment, despite evidence that taxes can be efficient and equitable when properly implemented. The primary challenge for policymakers is devising tax rules that lower evasion and corruption while adequately protecting the tax base and lessening the burden on firms.
Effect of Tax Reforms on Corporate on Nigerian Economic Developmentijtsrd
This study assessed the effect of tax reforms on productivity in Nigeria over the period of 1992 to 2019. It examined the impact of value added tax (VAT) and company income tax (CIT) on GDP per capita as a measure of productivity. The study employed descriptive statistics, Pearson correlation, and regression analysis to analyze the time series data obtained from various sources. The study found that VAT and CIT had a substantial negative influence on GDP per capita in Nigeria, whereas petroleum profit tax had a significant positive effect. It was recommended that the government should diversify the economy to increase the overall tax revenue base and promote more development.
An investigation of the effect of vat on revenue profiles of south western ni...Alexander Decker
This document summarizes a study that examined the effect of Value Added Tax (VAT) on the revenue profiles of state governments in Southwestern Nigeria from 2002 to 2011. The study used secondary data from approved budgets of five states. Panel regression analysis found that VAT had a positive and significant relationship with state revenues. The study concluded that increasing consumption through poverty alleviation could increase VAT revenues for states by boosting the goods and services subject to VAT.
Effect of vat and tax on economy an analysis in the context of bangladesh.Alexander Decker
This document summarizes a research paper on the effects of taxes and VAT on the economy of Bangladesh. It provides background on VAT and how it has replaced sales taxes in Bangladesh. It discusses the country's current tax policies, including income tax rates that are progressive up to 25% and a uniform 15% VAT rate. It analyzes how the tax system affects people in Bangladesh, noting the heavy reliance on indirect taxes results in a small number of taxpayers shouldering the burden. The narrow tax base and exemptions are also issues. In conclusion, broadening the tax base is desirable but agricultural income exemptions need reconsideration given many affluent people claim agricultural income to avoid taxes.
Position paper domestic revenue mobilizationSalia Adamu
This paper is targets the Government revenue authorities and finding innovative ways of raising revenue through the informal sector workers. All the revenue agencies are intensifying more revenue collection through old tax collection methods. This is done usually through the easy ways of PAYE, VAT and corporate taxes collection. The informal sector worker which account for 70% of the workforce are the least targeted for taxation. In view of growing public expenditure and reduction in annual budgetary support from development partners, there is the need to intensify domestic revenue generation through innovative strategies and capturing more informal sector workers.
Deterrent tax measures and tax compliance in nigeriaAlexander Decker
This document summarizes a study that examines the effects of deterrent tax measures on tax compliance in Nigeria. It begins with an introduction that outlines the importance of taxes in generating government revenue. It then reviews Nigeria's existing tax policies and reforms, discussing the country's tax administration system. The study uses a regression analysis of survey responses to test hypotheses about the relationship between deterrent tax measures and compliance. The analysis finds that Nigeria's existing deterrent measures are inadequate and have not promoted compliance. It also finds that fostering voluntary compliance and taxpayer morale would enhance tax compliance. The study recommends that Nigerian revenue authorities adopt approaches to encourage voluntary compliance and appropriately sanction defaulters.
This document summarizes a research paper that studied the influence of taxpayer awareness and tax morale on tax evasion in Bandung, Indonesia. The study used a survey questionnaire to collect data from 436 taxpayers. It analyzed the data using path analysis and found that both taxpayer awareness and tax morale partially and simultaneously had a significant negative effect on tax evasion. The study concluded that increasing taxpayer awareness and tax morale can reduce levels of tax evasion.
Government accountability and voluntary tax compliance in nigeriaAlexander Decker
This document summarizes a research study that examined the relationship between government accountability and voluntary tax compliance in Nigeria. The study tested the hypothesis that citizens' perceptions of government accountability influence their voluntary tax compliance. The findings supported the hypothesis, indicating that citizens' views of whether the government upholds its obligations to citizens shapes tax morale and voluntary tax compliance. Specifically, if citizens feel tax money is not effectively transformed into public goods, their tax morale decreases, reducing voluntary compliance. The study recommends improving public governance to motivate voluntary compliance and reduce the tax gap.
A parametric debate of value added tax, economic growth and poverty reduction...Alexander Decker
This study examines the relationship between Value Added Tax (VAT) revenue, economic growth, and poverty reduction in Nigeria using time series data from 1994-2012. Two regression models are used. The first finds that VAT revenue has a positive and significant impact on economic growth. The second finds that economic growth has a negative but insignificant impact on poverty reduction. The descriptive statistics show average annual growth rates for GDP, government revenue, VAT, capital expenditure, secondary school enrollment, poverty rate, and labor force. Correlation analysis indicates GDP, government revenue, VAT, and secondary school enrollment are positively correlated, while capital expenditure and poverty rate are negatively correlated with other variables.
Government revenue(Public Fiscal Administration)Suzana Vaidya
The document discusses government revenue and taxation. It defines government revenue as money received by a government from sources like taxes on income, wealth, goods, services, exports/imports, and non-tax sources like profits from state-owned corporations. Revenue is used to fund government services that benefit the public like infrastructure development. The main sources of government revenue are taxes, non-tax revenue, and capital receipts. Taxes are either direct taxes paid directly by individuals/corporations or indirect taxes paid to intermediaries and passed on to consumers. Non-tax revenue comes from sources like dividends, interest, fees, and grants. A good tax system aims to raise sufficient and equitable revenue while minimizing economic burden and incentivizing productivity
India Budget 2018 ...Changing Landscape - An Analysis by K. C. Mehta & Co.Prashant Kotecha
This document provides an overview and summary of the key aspects of the Indian economy based on the Economic Survey of 2017-18. Some of the main points covered in the 3 sentences are:
1) The Economic Survey analyzed the Indian economy using big data from sources like GST, EPFO, ESIC to provide new perspectives on economic indicators and issues like the gender gap.
2) Key findings included that over 30% of non-agricultural jobs were in the formal sector based on social security enrollment, states' prosperity correlated more strongly with international trade than domestic trade, and the agricultural sector is becoming more feminized.
3) The document also summarizes fiscal trends like tax revenue growth and deficits,
Tax Morale and Its Effect on Taxpayers’ Compliance to Tax Policies of the Nig...IOSR Journals
This document discusses a study investigating the effect of tax morale on taxpayers' compliance with tax policies in Nigeria. The study aims to determine how tax morale influences revenue generation. A literature review provides background on Nigeria's tax system and history. The study uses questionnaires to collect primary data, which is then analyzed using statistical software. Five hypotheses are presented regarding the relationships between tax morale, trust in government, social norms, legal systems, and traditional institutions on tax compliance. The results showed tax morale and social norms have a significant positive effect on tax compliance, while legal systems and traditional institutions do not. The study recommends educating taxpayers and future generations on tax obligations and using tax revenues appropriately.
The impact of tax administration(fod)projectjames segun
in many nation which have being having problem in financing there development, who have fail in their tax administration which have reduce their national revenue.
Tax Rate Changes and its Impact on Tax Burden Leading to Tax Evasion Practice...inventionjournals
Tax evasion is the major destruction for any country’s economy. It plays a significant role in the developing country’s economy. Due to tax evasion practices the citizens of the country are getting poor infrastructure facilities. The ending results of tax evasion to the Government is revenue loss, which cause a serious damage and deficit of revenue which leads to lack of public expenditure. The study examines factors that influencing tax evasion practices in India. The survey was conducted with primary data from 110 respondents with five point rating scaled questionnaire. The outcomes of the study reveals that the low quality of service to the public in return for the tax significantly impact the tax evasion practices in India. Furthermore, high impact on tax evasion on variables such as tax system, transparency, fairness and accountability. High level of corruption is also one of the major factors for the tax evasion practices in India. The study recommends necessary steps to be taken in view of the transparency, accountability and corruption in order to gain the public morale and minimize the tax evasion practices in India.
Lado Gurgenidze, former Prime Minister of Georgia, discusses key economic reforms that transformed Georgia since the Rose Revolution in 2003. These include lowering taxes to a flat rate, targeting inflation, removing import tariffs and simplifying business regulations. As a result, Georgia experienced high GDP growth, declining debt, and became one of the freest economies in the world. Gurgenidze argues the sustainability of reforms that are pervasive, permanent, quantifiable and affect citizens' daily lives, such as low flat taxes and ease of business. Reforms at risk of being reversed are niche, complex and non-quantifiable.
The effect of internally generated revenue on economic growthResearchWap
This document discusses the effect of internally generated revenue on economic growth in Lagos State, Nigeria. It begins by defining key terms like revenue, taxation, and economic growth. It then provides background on the development of local governments and reforms increasing their autonomy and responsibilities. However, many state governments are underperforming due to poor finances from low internally generated revenue. This is exacerbated by inflation eroding available funds. The study aims to evaluate the relationship between internally generated revenue and economic growth in Lagos State over 5 years. It establishes objectives, research questions, and hypotheses to test this relationship and the contribution of value added tax.
Taxation: The Instrument of Economic Growth in NigeriaAJHSSR Journal
ABSTRACT: The provision of basic infrastructures are very important to the economic development of a
nation. The extent to which the government is able to provide these amenities is determined by the number of
resources at the government's disposal. The inability of the government to provide these basic amenities have
led to the winding up and relocation of many multinational companies operating in Nigeria to other African
countries. As a result, this study investigated the effects of corporate income tax (CIT) and customs and excise
duty (CED) on economic growth. The study used a descriptive research design, and data from 1971 to 2020
were gathered from the Central Bank of Nigeria (CBN) statistical bulletin and Federal Inland Revenue Service
(FIRS) publicationThe study concluded that the provision of basic infrastructures will boost the economy and
will drive individual taxpayers towards a positive response to tax payments. This will increase the level of tax
compliance and result in additional revenue for the government.This study recommended that the government
should make developmental projects their top agenda item as the availability of infrastructural facilities is a
necessary condition for investment that will grow the economy.
KEYWORDS: Company Income Tax, Custom and Excise Duty, Economic Growth, Gross Domestic Product,
Taxation
Effect of Custom and Excise Duties on Infant Mortality in Nigeriaijtsrd
This study examined the effect of custom and excise duties on infant mortality rate in Nigeria from 2004 2021. The study adopted Ex post Facto research design. Data were extracted from CBN statistical Bulletin. Descriptive statistics was used to analyze the data and the hypothesis was tested with regression analysis via E View 9.0 statistical software. The study indicates that custom and excise duties have a negative but significant effect on infant mortality rate in Nigeria. As a result, the report advised that institutional reforms be implemented at the Department of Customs in order to plug manifest leakages. Tax officials tax collection mechanisms must be free of corruption and embezzlement. If this is not done, the revenue collected may fall short of the target. Oranefo, Patricia C. "Effect of Custom and Excise Duties on Infant Mortality in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-6 | Issue-6 , October 2022, URL: https://www.ijtsrd.com/papers/ijtsrd51941.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/51941/effect-of-custom-and-excise-duties-on-infant-mortality-in-nigeria/oranefo-patricia-c
Effect of Indirect Taxation on Economic Development of Nigeriaijtsrd
This study examined the effect of indirect taxation on economic development of Nigeria. The specific objectives were to evaluate the effect of petroleum profit tax on the real gross domestic product of Nigeria, examine the impact of company income tax on the gross domestic product of Nigeria and determine the impact of value added tax on the real gross domestic product of Nigeria. The study adopted ex post facto research design. The study made use of secondary data obtained from the Central Bank of Nigeria Statistical Bulletins for the relevant years. The hypotheses were tested using granger causality statistical tool. The following findings were made for this study Petroleum profit tax has no significant effect on the gross domestic product of Nigeria. Company income tax has significant effect on the gross domestic product of Nigeria and value added tax have significant effect on the gross domestic product of Nigeria. The study concluded that about 96 changes in the dependent variable are explained by the independent variable. The study recommends that Government should make available more non interest loans available to farmers as a way of diversifying the economy from its over dependency in the oil sector, and that strict penalties should be meted to people who avoid and evade tax payments in order to minimize the incidence of tax evasion and tax avoidance. Ezu, Gideon Kasie | Jeff-Anyeneh Sarah. E. "Effect of Indirect Taxation on Economic Development of Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-6 | Issue-1 , December 2021, URL: https://www.ijtsrd.com/papers/ijtsrd47781.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/47781/effect-of-indirect-taxation-on-economic-development-of-nigeria/ezu-gideon-kasie
This study used error correction model (ECM) to analyse the causality between Value Added Tax (VAT) and the Nigerian Economy proxied by GDP during the period 1994-2015. The data such as VAT and GDP were obtained from Central Bank of Nigeria (CBN) statistical bulletin and Federal Inland Revenue Services (FIRS). The results of the findings revealed that VAT exerts positive and significant influence on GDP while there was evidence of unidirectional causality running from VAT to GDP. Therefore, the researchers recommend that in order to enhance economic growth of Nigeria through VAT revenue, there is need to plug all the lapses identified in tax administration and educate the tax administrators as well as the entire populace on the relevant of VAT revenue to the economy.
American Journal of Multidisciplinary Research and Development is indexed, refereed and peer-reviewed journal, which is designed to publish research articles.
The Relationship between Tax Avoidance Strategies and Economic Growth in Nigeriaijtsrd
This study investigated the relationship between tax avoidance strategies and economic growth in Nigeria, a sample of selected respondents was drawn using the convenience sampling within Nigeria. To achieve this, the sample consisted two groups, the tax payers and the tax officials, while tax payers included managers, CFOs and employees of private sector, the tax officials were selected from the Federal Inland Revenue Service FIRS . Descriptive analyses technique was employed to rank the selected tax avoidance strategies based on the responses obtained from each group while the multiple regression estimation technique was used to determine how each strategy affects economic growth in Nigeria. The descriptive analysis revealed that profit shifting to tax havens and transfer pricing strategies have significant inverse relationship with economic growth in Nigeria. We therefore recommended the need for a critical review of the Nigerian tax laws to take care of loopholes in the tax laws, and the contribution of other professionals such as accountancy firms and public tax officials should also be checked by the government by breaking the monopolistic tendency of these accountancy firms and ensuring that public tax authority is well funded. Dr. Sunday Zibaghafa | Dr. Odogu Laime I. "The Relationship between Tax Avoidance Strategies and Economic Growth in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-7 | Issue-5 , October 2023, URL: https://www.ijtsrd.com/papers/ijtsrd60019.pdf Paper Url: https://www.ijtsrd.com/management/accounting-and-finance/60019/the-relationship-between-tax-avoidance-strategies-and-economic-growth-in-nigeria/dr-sunday-zibaghafa
The impact of tax administration(fod)projectjames segun
in many nation which have being having problem in financing there development, who have fail in their tax administration which have reduce their national revenue.
Effect of Fiscal Responsibility Act on Budgeting and Accountability Practice ...ijtsrd
This study examines the effect of the Fiscal Responsibility Act on budgeting and accountability practice in Nigeria's Fourth Republic. Specifically, the study determines the relationship between the pre and post effect of the Reform Act to ascertain if there is any significant difference in the management of the nation's fiscal operations. The study made use of secondary data obtained from the Central Bank of Nigeria Annual Reports and Accounts, the Central Bank Nigeria Statistical Bulletins and report of the Accountant General of the Federation as audited by the Auditor General of the Federation for the period under study. Six research questions and seven hypotheses were formulated to guide the study. The data generated for this study were presented in tables, graphs and mean scores and analyzed using the Statistical Package for Social Sciences version 22. The hypotheses were tested using the T test of difference and the Pearson Correlation r . Results revealed among others that the number of months of default on the publication of Federal Government Audited Accounts was reduced in the post Fiscal Responsibility Act era. Again, there is a significant negative trend in the mean corruption index after the introduction of the Act and that actual capital expenditure is more closely related to capital expenditure budget in the post than pre Fiscal Responsibility Act period. Based on the findings, we recommended that budgeting and accountability practice should be made more proactive by imbibing the culture of timely auditing and reporting standards as stated in sections 49 and 50 of the Fiscal Responsibility Act, 2007. Okegbe, T. O. "Effect of Fiscal Responsibility Act on Budgeting and Accountability Practice in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-5 , August 2019, URL: https://www.ijtsrd.com/papers/ijtsrd26639.pdfPaper URL: https://www.ijtsrd.com/management/accounting-and-finance/26639/effect-of-fiscal-responsibility-act-on-budgeting-and-accountability-practice-in-nigeria/okegbe-t-o
Tax expenditure in sub saharan africa the nigerian experience.Alexander Decker
This document summarizes a research paper on tax expenditures in Nigeria. It discusses how the Nigerian government uses tax incentives and concessions to achieve economic goals, but this results in significant losses of potential tax revenue. Between 2004-2006, revenue losses from various tax exemptions and concessions totaled over N54 billion, N71 billion, and N56 billion respectively. The document examines how tax expenditures are less transparent than direct spending and can undermine fiscal accountability if not properly integrated into budgeting processes. It analyzes the effects of tax expenditures on Nigeria's budget and the economy.
This study examined the impact of tax reforms on the liquidity of Nigerian stock market. Secondary data were used for this study. The relevant data were sourced from Securities and Exchange Commission Statistics and Federal Inland Revenue Service Statistics Report between 1982 and 2021. Vector Auto Regressive (VAR) Model comprising Impulse Response Function (IRF) and Variance Decomposition (VD) was used to analyze the determinants and the liquidity of the stock market. The results of the VAR Model showed that the stock market liquidity (proxied by turnover ratio) significantly responded to changes in the movement of the tax reform indicators and positive both in the short and long run. This study concluded that a positive relationship exists between tax reforms and stock market liquidity. It was recommended that the regulatory body of tax administration must intensify efforts to mitigate the impacts of the global financial crisis on the Nigerian Exchange Group.| Publisher: International Journal of Research and Innovation in Social Science (IJRISS)
Vat revenue and state investment spending in nigeria, 1994 2010.Alexander Decker
This study examines the relationship between VAT revenue and state investment spending in Nigeria from 1994 to 2010. Time series data on VAT revenue and state investment expenditure were collected from the Central Bank of Nigeria. Unit root tests and cointegration analysis were conducted to determine the long-run relationship between the variables. Vector error correction modeling was also used to analyze the causal link between VAT revenue and state investment spending. The results showed there is a long-run bidirectional causal relationship between the two variables, indicating they influence each other both in the short-run and long-run.
Analysis of Firm Attributes and Tax Aggressiveness of Quoted Commercial Banks...ijtsrd
The study examined the influence of firm attributes on tax aggressiveness of quoted Commercial Banks in Nigeria. It specifically evaluated how firm profitability, leverage, relate with tax aggressiveness in Nigerian banks. The study employed Ex Post Facto research design. The sample size consist of an equal sample of the 13 listed Commercial Banks firms quoted on the Nigerian Stock Exchange. Secondary data was used for the study as extracted from the annual reports and financial statements of the selected banks for a nine year period of 2012 2020. The panel data were analyzed using descriptive statistic, correlation and panel data regression technique which was dually estimated to capture the samples. The outcome of the Nigerian model showed that while profitability has significant positive relationships with tax aggressiveness, while firm leverage has insignificant positive relationships with tax aggressiveness. The study recommends, among others, that Considering that highly profitable firms were highly tax aggressive as shown in the Nigerian model, management should ensure that they install strong corporate governance mechanisms in order to guarantee that the intended gains from tax avoidance activities are not opportunistically misused by the managers. Gina, Oghogho Olufemi | Ogbodo, Okenwa Cy | Nwanna, Ifeanyi "Analysis of Firm Attributes and Tax Aggressiveness of Quoted Commercial Banks in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-6 | Issue-1 , December 2021, URL: https://www.ijtsrd.com/papers/ijtsrd47881.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/47881/analysis-of-firm-attributes-and-tax-aggressiveness-of-quoted-commercial-banks-in-nigeria/gina-oghogho-olufemi
Government Expenditure and Economic Growth Nexus: Empirical Evidence from Nig...iosrjce
This study has examined the impact of public expenditure on economic growth in Nigeria using time
series data for the period 1970-2012. Secondary data were sourced from the CBN, NBS, journals, text books
etc. The adopted model was fitted with three variables: real GDP, capital and recurrent expenditure. The tools
of analysis were the ADF unit root test and ordinary least square multiple regression accompanied by pairwise
Granger causality test. The major objective of this study is to analyse the impact as well as direction of
causality between the fiscal variables and economic growth. All the variables included in the model are
stationary at level. Empirical findings from the study show that there is positive and insignificant relationship
between capital expenditure and economic growth while recurrent expenditure had a significant positive impact
on economic growth. Also, Granger causality test demonstrates a unidirectional causality running from the
fiscal variables to economic growth in validation of the Keynesian theory. Consequently, the study
recommended more allocation of resources for recurrent purposes as well; government should establish the
body that will monitor contract awarding process of capital projects closely, to guard against over estimation of
project cost and stealing of public funds.
Functional Tax Governance Apparatus and Economic DevelopmentDr. Amarjeet Singh
The proportion of tax earnings to gross domestic
product (GDP) in Nigerian economy had been ranked and
affirmed the least in the sub-Sahara African and as
evolving economy, different reasons attested to this fact,
hence, the study is aimed at investigate the inherent lacuna
of tax governance apparatus in responses to economic
development as broad objective. The study employed field
research design, the research instrument that was deployed
for collection of data is purposive and structured
questionnaire targeted at elicit information from relevant
and related stakeholders in tax matters, the research
instrument and data collected were subjected to Cronbach
alpha test and heteroscedasticity test to affirm the
validity/reliability and best linear unbiased estimator of
data collected respectively. The result revealed that the
responsiveness of economic development to tax assessment,
tax policy and tax administration were statistically
significant inversely related while tax collection was
statistically insignificant related directly with economic
development. Thereby study concluded that poor
management and administration of tax system in Nigeria
responsible for adverse relationship that subsist between
the proportion of tax earnings to GDP and resulted
decayed and declined physical infrastructures and socioeconomic development.
Analysis of the effects of capital flight on economic growth evidence from ni...Alexander Decker
This document analyzes the effects of capital flight on economic growth in Nigeria from 1980 to 2011. It finds that large capital outflows from Nigeria are due to political instability, high fiscal deficits, high interest rates, and high external debt servicing costs. It recommends policies to alleviate capital flight such as good governance, fiscal discipline, and enacting laws to encourage repatriation of illegally moved funds for investment in Nigeria's real economy.
A causality analysis between tax audit and tax compliance in nigeriaAlexander Decker
This document examines the relationship between tax audit and tax compliance in Nigeria. It analyzes data collected from questionnaires administered to 204 respondents. The empirical analysis found a significant relationship between random tax audits, cut-off tax audits, and conditional tax audits on tax compliance in Nigeria. The paper concludes that tax audits are an effective compliance strategy to improve tax compliance, as many Nigerians are known to evade or avoid taxes. It recommends that the government increase transparency around tax revenue collection and expenditure, faithfully implement tax laws regardless of status, and improve the standard of tax audits.
Similar to International Journal of Humanities and Social Science Invention (IJHSSI) (20)
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Forrester’s Digital Transformation Framework
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International Journal of Humanities and Social Science Invention (IJHSSI)
1. International Journal of Humanities and Social Science Invention
ISSN (Online): 2319 – 7722, ISSN (Print): 2319 – 7714
www.ijhssi.org Volume 2 Issue 6ǁ June. 2013ǁ PP.16-26
www.ijhssi.org 16 | P a g e
The effects of Tax Revenue on Economic growth in Nigeria
(1970 – 2011)
1
Otu, Helen Bukie , 2
Theophilus Oyime Adejumo
Department of Economics, University of Calabar, Calabar.
1
edame, Greg. Ekpung, Ph.D (Corresponding Author) Sub-Dean & Senior Lecturer Department of Economics,
Faculty of Social Sciences, University of Calabar, Calabar, Nigeria.
2
Department of Political Science, Faculty of Social Sciences, University of Calabar, Calabar.
ABSTRACT: This study examines the effect of tax revenue on economic growth in Nigeria, utilizing time
series data for the period spanning from 1970 to 2011. The study adopts the Ordinary Least Square (OLS)
regression technique and established that tax revenue has positive effect on economic growth in Nigeria. The
result shows that domestic investment, labour force and foreign direct investment have positive and significant
effect on economic growth in Nigeria. It is recommended that efficient tax policy be implemented. Also, policy
to improve labour productivity should be sustained, while policies to attract foreign investment should be
implemented.
KEYWORDS: Taxation, Tax Revenue, Foreign investment, Ordinary Least Square, Regression.
I. INTRODUCTION
1.1 Background to the Study
For development and growth of any society, the provision of basic infrastructure is quite necessary.
This perhaps explains why the government shows great concern for a medium through which funds can be made
available to achieve their set goals for the society (Fagbemi et al, 2010). Government needs money to be able to
execute its social obligations to the public and these social obligations include but not limited to the provision of
infrastructure and social services. According to Murkur (2001), meeting the needs of the society calls for huge
funds which an individual or society cannot contribute alone and one medium through which fund is derived is
through taxation. Tax is a major source of government revenue all over the world. Government use tax proceeds
to render their traditional functions, such as the provision of public goods, maintenance of law and order,
defence against external aggression, regulation of trade and business to ensure social and economic maintenance
(Azubike, 2009; Edame, 2008:14).
In Nigeria, tax revenue has accounted for a small proportion of total government revenue over the
years. This is because the bulk of revenue needed for development purposes is derived from oil. Crude oil
export has continued to account for over 80% of the total federal government revenue, while the remaining 20%
is contributed by non-oil sector in which taxation is a part. For instance, Oil sector share in total revenue was
54.4% in 1972 against 45.6% share from non oil sector the same year. By 1974 oil share of total revenue had
reached 82.1% while only 17.9% accrued from non oil sector. Following the glut in the world oil prices in the
later part of the 1970s, the oil share in total revenue fell to 61.8% in 1978 while non oil sector‟s share rose to
38.2%. And since 1984, the oil sector share in total revenue has continued to rise, though with occasional falls in
between periods. By 2006, oil share of total revenue had reached 88.6% against non oil share of 11.4%. As at
2009, oil sector share in total revenue stood at 78.8% while non-oil sector accounted for just 21.3% of the total
revenue (CBN, 2010).
From the above picture, it is evidenced that revenue from the non-oil sector (in which taxation is a part)
has not contributed significantly to total output. Thus, the study is an attempt to examine the effect of tax
revenue on economic growth in Nigeria.
1.2 Statement of the Problem
Tax revenue has been seen as major source of government revenue all over the world. Government use
tax proceeds to render their traditional functions, such as the provision of public goods, maintenance of law and
order, defence against external aggression, regulation of trade and business to ensure social and economic
maintenance.
However, it is evidenced that the role of taxation in promoting economic growth in Nigeria is not felt,
primarily because of its poor administration. The major challenges facing tax administration in Nigeria include
frontiers of professionalism, poor accountability, lack of awareness of the general public on the imperatives and
2. The effects of tax Revenue on economic growth ...
www.ijhssi.org 17 | P a g e
benefits of taxation, corruption of tax officials, tax avoidance and evasion by taxing units, connivance of taxing
officials with taxing population, high rate of tax, poor method of tax collection, etc. Tax administration and
individual agencies suffer from limitations in manpower, money, tools and machinery to meet the ever
increasing challenges and difficulties. In fact, the negative attitude of most tax collectors toward taxpayers can
be linked to poor remuneration and motivation.
There is also the problem of accuracy of tax statistics. Apart from some few states such as Delta,
Lagos, Kaduna and Katsina and the Nigerian Customs Services, where tax are known to be well kept, other
agencies of the states and relevant federal tax offices have serious failures in data management. Several other
effects of taxation can also be identified. First, taxes can inhibit investment rate through high tax rates such as
corporate and personal income, capital gain taxes. Second, taxes can slow down growth in labour supply by
disposing labour leisure choice in favour of leisure. Third, tax policy can affect productivity growth through its
discouraging effect on research and development expenditures. Fourth, taxes can lead to a flow of resources to
other sectors that may have lower productivity. Finally, high taxes on labour supply can distort the efficient use
of human capital high tax burdens even though they have high social productivity. From the foregone therefore,
the major question raised is what possible effect does tax revenue have on economic growth in Nigeria?
1.3 Objective of the Study
The broad objective of this study is to examine the role of taxation on economic growth and development of the
Nigerian economy. From the broad objective above, the specific objectives of this study are as follows:
i. To examine the effect of tax revenue on economic growth in Nigeria.
ii. To assess the impact of domestic investment on economic growth in Nigeria.
iii. To investigate the relationship between government expenditure and economic growth in Nigeria.
1.4 Research Hypothesis
Based on the objectives above, the following research hypotheses are formulated, and which will be tested later.
i. Ho: there is no significant effect of tax revenue on economic growth in Nigeria.
ii. H1: there is significant effect of tax revenue on economic growth in Nigeria.
iii. Ho: there is no significant impact of domestic investment on economic growth in Nigeria.
iv. H1: there is significant impact of domestic investment on economic growth in Nigeria.
v. Ho: there is no significant relationship between government expenditure and economic growth in Nigeria.
vi. H1: there is significant relationship between government expenditure and economic growth in Nigeria.
II. LITERATURE REVIEW AND THEORETICAL FRAMEWORK
Taxation as defined by Ogundele (1999) is the process or machinery by which communities or groups
of persons are made to contribute in some agreed quantum and method for the purpose of the administration and
development of the society. It can be inferred that the payment of tax will in turn be beneficial to the entire
citizenry. This view is similar to the definition of Soyode and Kajola (2006) who defined tax as a compulsory
exaction of money by a public authority for public purposes.
Nightingale (1997) described tax as a compulsory contribution imposed by the government. These
various authors concluded that it is possible for tax payers not to receive anything identifiable for their
contribution but that they have the benefit of living in a relatively educated, healthy and safe society. However,
the infrastructure which tax payers are supposed to enjoy is in a deplorable condition (Fafunwa, 2005),
educational system is in disarray (Obaji, 2005) and the health system is in a worrisome condition (Lambo,
2005).The World Bank (2000) noted that taxes are a compulsory transfer of resources to the government from
the rest of the economy. They may be levied in cash or in-kind (for example, involving mandatory labour), and
they can be explicit or implicit. Other classifications of taxes are Direct or Indirect (Classification by Incidence)
and Proportional, Progressive & Regressive (Classification by Burden of Distribution) Adeyeye (2004)
described tax as a liability on account of the fact that the tax payer has an income of a minimum amount and
from certain specified source(s) or that he owns certain tangible or intangible property or that he is engaged in
certain economic activities which have been chosen for taxation. Therefore, the individual contributes in some
quantum measure to the fund available for use by government in providing necessary infrastructure for her
citizens. (The World Bank, 2000; Adeyeye, 2004:18; Soyode and Kajola, 2006).
Tax, according to Black‟s Law Dictionary is a financial charge or other levy imposed on an individual
or a legal entity by a State or a functional equivalent of a State (for example, secessionist movements or
revolutionary movements). Taxes are also imposed by many sub-national entities. Taxes consist of direct tax or
indirect tax, and may be paid in money or as its labour equivalent (often but not always unpaid). In essence, tax
is seen as pecuniary burden put upon individuals or property to support the government in its oversight activities
of a nation and exacted by legislative authority (Fagbemi et al, 2010).
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In Nigeria, the taxation system dates back to 1904 when the personal income tax was introduced in
northern Nigeria before the unification of the country by the colonial masters. It was later implemented through
the Native Revenue Ordinances to the western and eastern regions in 1917 and 1928, respectively. Among other
amendments in the 1930s, it was later incorporated into Direct Taxation Ordinance No. 4 of 1940 (Library of
Congress, 2008). In essence, the Nigerian tax system has been based on 1948 British tax laws and has been
undergoing a lot of changes. Since then, different governments have continued to improve on Nigeria‟s taxation
system. A vital aspect of the improvement on the nation‟s tax system is the recent Federal Inland Revenue
Service (Establishment) Act, 2007, Companies Income Tax (Amendment) Act, 2007 and the Draft National Tax
Policy pending before the National Assembly. (Soyode and Kajola , 2006)
On the other hand, Kay, (1980) opined that tax avoidance takes place when facts of the transaction are
admitted but they have been arranged or presented in such a way that the resulting tax treatment differs from
that intended by the relevant legislation. In essence, tax evasion is illegal while tax avoidance is not illegal under
the ambience of the law (Soyode & Kajola, 2006: 60; Kay, 1980: 142-145).
2.1 Theoretical Framework
Many theories of taxation exist but this study presents three of those theories as follows.
Diffusion Theory of Taxation
According to diffusion theory of taxation, under perfect competition, when a tax is levied, it gets
automatically equitably diffused or absorbed throughout the community. Advocates of this theory, describe that
when a tax is imposed on a commodity by state, it passes on to consumers automatically. Every individual bears
burden of tax according to his ability to bear it.
For instance, a specific tax is imposed on say, cloth. Manufacturer raises prices of commodity by the
amount of tax. Consumers buy commodity according to their capacity and thus share burden of tax. In the words
of Mansfield: "It is true that a tax laid on any place is like a pebble falling into a lake and making circles till one
circle produces and gives motion to another". This quotation explains that just as a pebble gets diffused in a
lake, similarly a tax imposed on a commodity is also absorbed and its burden is felt equally among various
sections of community.
Advocates of this theory assume perfect competition in the market but in world of reality, it is
imperfect competition which prevails. If tax gets automatically diffused through the community, then most of
worries of finance minister will be over. He will simply impose tax and collect money from people without
worrying about final resting place of a tax. In actual practice we find that taxes do not get distributed equally.
Some taxes remain where they are imposed first and some are partly or wholly shifted on to me consumers.
Diffusion theory of taxation has however been criticised. The diffusion theory of taxation has never gained any
importance in the world of reality. It has never been seen that a tax gets automatically equitably distributed
among people. It is true that in some taxes, diffusion or absorption does take place but that too is not throughout
the community.
Accordingly, another criticism of the theory of taxation is that there are few taxes like income tax,
inheritance tax, toll tax in which there is no absorption at all.
2.1.1 Benefit Theory of Taxation
According to this theory, the state should levy taxes on individuals according to the benefit conferred on
them. The more benefits a person derives from the activities of the state, the more he should pay to the
government. If, in accordance with the “benefits theory of taxation,” we conceive of taxes as payments in
exchange for government benefits, perhaps states should be obliged to confer personal tax benefits on residents
who contribute to their tax coffers. The benefits theory would imply that a resident should be able to collect
personal tax benefits to the extent that her tax payments to the source state exceed the money value of any
source state government benefits she already receives, including infrastructure, regulated labour and capital
markets, and so on. Although intuitively attractive, the benefits theory of taxation suffers from several major
draw backs.
First, it would be impossible to implement precisely due to the difficulty of determining the amount of
government benefits, including diffuse benefits such as military protection received by each resident and non-
resident taxpayer.
Second, the benefits theory does not accord with modern understandings of income taxation. In a purely
domestic context, states generally do not condition government benefits upon recipients‟ payment of taxes.
Indeed, taxpayers receiving the largest government benefits may be those who, due to their needy
circumstances, pay the least taxes.
Third, if the state maintains a certain connection between the benefits conferred and the benefits derived.
It will be against the basic principle of the tax. A tax, as we know, is compulsory contribution made to the
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public authorities to meet the expenses of the government and the provisions of general benefit. There is no
direct quid pro quo in the case of a tax.
Fourth, most of the expenditure incurred by the slate is for the general benefit of its citizens, it is not
possible to estimate the benefit enjoyed by a particular individual every year. If we apply this principle in
practice, then the poor will have to pay the heaviest taxes, because they benefit more from the services of the
state. And if we get more from the poor by way of taxes, it is against the principle of justice.
2.1.2 Ability to Pay Theory
The most popular and commonly accepted principle of equity or justice in taxation is that citizens of a
country should pay taxes to the government in accordance with their ability to pay. Rather than the benefits
principle, the “ability-to-pay principle” generally dominates modern equity discussions. Under the ability to pay
principle, people with higher incomes should pay more taxes than people with lower incomes. It appears very
reasonable and just that taxes should be levied on the basis of the taxable capacity of an individual. For instance,
if the taxable capacity of a person A is greater than the person B, the former should be asked to pay more taxes
than the latter.
It seems that if the taxes are levied on this principle as stated above, then justice can be achieved. But
our difficulties do not end here. The fact is that when we put this theory in practice, our difficulties actually
begin. The trouble arises with the definition of ability to pay. The economists are not unanimous as to what
should be the exact measure of a person's ability or faculty to pay. The main viewpoints advanced in this
connection are as follows:
(a) Ownership of Property
Some economists are of the opinion that ownership of the property is a very good basis of measuring
one's ability to pay. This idea is out rightly rejected on the ground that if a person‟s earns a large income but
does not spend on buying any property, he will then escape taxation. On
the other hand, another person earning income buys property; he will be subjected to taxation. It is therefore
absurd and unjustifiable that a person, earning large income is exempted from taxes and another person with
small income is taxed.
(b) Tax on the Basis of Expenditure
It is also asserted by some economists that the ability or faculty to pay tax should be judged by the
expenditure which a person incurs. The greater the expenditure, the higher should be the tax and vice versa. The
viewpoint is unsound and unfair in every respect. A person having a large family to support has to spend more
than a person having a small family. If we make expenditure as the test of one's ability to pay, the former person
who is already burdened with many dependents will have to' pay more taxes than the latter who has a small
family. So this is unjustifiable.
(c) Income as the Basics
Most of the economists are of the opinion that income should be the basis of measuring a man's ability
to pay. It appears very just and fair that if the income of a
person is greater than that of another, the former should be asked to pay more towards the support of the
government than the latter. That is why in the modern tax system of the countries of the world, income has been
accepted as the best test for measuring the „ability to pay „of a person.
Apart from the theories of taxation reviewed above, this section also presents the review of growth theories.
2.2 Exogenous growth model
The exogenous growth model, also known as the neo – classical growth model or Solow-Swan growth
model was first devised by Nobel Prize winning Economist, Robert Solow in 1957. The model believes that a
sustained increase in capital investment increases the growth rate only temporarily; because the ratio of capital
to labour goes up but the marginal product of additional units of capital is assumed to decline and the economy
eventually moves back to a long – term growth path, with real GDP growing
at the same rate as the work force plus a factor to reflect improving productivity. A steady – state growth path is
reached when output, capital and labour are all growing at the same rate, so that output per worker and capital
per worker are constant.
The centrepiece of the standard neoclassical growth model developed by Solow (1957) is an aggregate
production function of the form Yt = F (Kt, Lt, At)
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Where Y is output, K is capital, L is labour and A is an index of technology or efficiency. Solow posits
that F has the usual neoclassical properties; in particular, it is characterized by constant returns to scale,
decreasing returns to each input, and a positive and constant elasticity of substitution. The fundamental dynamic
equation of the model relates the evolution of the capital stock to a constant rate of saving and a constant rate of
depreciation. Labour and the level of technology grow at exogenous exponential rates.
If there were no technological progress, growth in this model would eventually come to a halt.
However, the formulation of the model is chosen so as to allow increases in efficiency to offset the diminishing
returns to capital. The economy therefore converges to a steady state in which output and capital per worker
both grow at the exogenous rate of technological progress. Accordingly, in the long run, economic growth is
unaffected by changes in the rate of saving or population growth. Changes in these parameters alter only the
level of the long-run growth path, but not its slope.
Neo – classical economists believe that to raise an economy‟s long-term trend rate of growth requires
an increase in the labour supply and an improvement in the productivity of labour and capital. The new –
classical model treats productivity improvements as an exogenous variable, meaning that productivity is
assumed to be independent of capital investment.
This model assumes that countries use their resources efficiently and that there are diminishing returns to capital
as
labour increases. From these two premises, the neo – classical model makes three important
predictions, first, increasing capital relatives to labour creates economic growth, since people can be more
productive given more capital. Second, poor countries with less capital per person will grow faster because each
investment in capital will produce a higher return than rich countries with ample capital. Third, because of
diminishing returns to capital, economics will eventually reach a point at which no new increase in capital will
create economic growth. This point is called a “steady state”.
The short-run implications of the neo- classical growth model include the following
(i) Policy measures like tax cuts or investment subsidies can affect the steady state level of output but not the
long – run growth rate.
(ii) Growth is affected only in the short – run as the economy converges to the new steady state output level.
(iii) The rate of growth s the economy converges to the steady state is determined by the rate of capital
accumulation.
(iv) Capital accumulation is in turn determined by the savings rate and the rate of capital depreciation.
Apart from the short-run implication, the model has following long – run Implications
(i) An economy will always converge towards a steady state rate of growth, which depends only on the rate
of technological progress and the rate of labour force growth.
(ii) A country with a higher saving rate will experience faster growth.
Several criticisms have been levelled against the model. Empirical evidence offers mixed support for the
model. Limitations of the model include its failure to take account of entrepreneurship and strength of
institutions. In addition, it does not explain how or why technological progress occurs. This failing has
led to the development of endogenous growth theory.
2. 3 Endogenous or New Growth Theory
Endogenous growth theory or new growth theory was developed in the 1980s, as a response to
criticism of the neo classical growth model. The endogenous growth theory holds that policy measures can have
an impact on the long – run growth rate of an economy. Endogenous growth economists believe that
improvements in productivity can be linked to a faster pace of innovation and extra investment in human capital.
Endogenous growth theorists stress the need for government and private sector institutions and markets which
nurture innovation, and private incentives for individuals to be inventive. The theory also provides a central role
for knowledge as a determinant of economic growth.
The endogenous growth literature has produced two distinct approaches on how to incorporate human
capital into models of economic growth. The first, which is due to Lucas, regards the accumulation of human
capital as the engine of growth. The second approach emphasizes the role of the human capital stock in the
process of innovation and adoption of new technologies. In the model formulated by Lucas, human capital enters
into the production function similarly to the way in which technology does in the Solow model, that is, in
labour-augmenting form.
Lucas proposes the following production technology:
Yt = AKβ
t (ut ht Lt)1-β
hγ
a,t
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where Y, A, K and L are, once again, output, technology, capital and labour, while u is the fraction of
an individual‟s time allocated to work, h is the skill level or human capital of the representative agent, and ha
is
the average human capital in the economy. The level of technology, A, is assumed to be constant (so that it
could in principle be dropped from the expression or subsumed within the capital term). Population growth is
taken as exogenous.
Setting aside the last term on the right-hand side for the moment, the most important assumption of the
model concerns the law of motion according to which the human capital variable evolves over time.
Because there are no diminishing returns to the acquisition of skills, human capital can grow without bound,
thereby generating endogenous growth. The properties of the steady state in the Lucas model depend on whether
there are external effects of human capital, which is the case if γ ≠ 0. In that case, the term h in the production
function therefore affects output. And because there are no diminishing returns to the acquisition of skills,
human capital can grow without bound, thereby generating endogenous growth. Lucas assumes that individuals
invest in human capital by spending part of their time acquiring skills, instead of a fraction of their income, like
in Mankiw/Romer/Weil (1992). Besides, Lucas ignores depreciation of human capital. More importantly, and
contrary to Mankiw/Romer/Weil, in the Lucas model, there are two
sectors of production: one for consumption goods and physical capital, and another for human capital.
The only input in the production of human capital is human capital. This takes into consideration that education
“relies heavily on educated people as an input”. Above all, the Lucas model is characterized by self-sustained
growth, which is driven by the accumulation of human capital.
The classical growth model consists of two sectors, producers of final output and an R & D sector. The
Research and Development (R & D) sector develops ideas that they are granted a monopoly power. R & D
firms are assumed to be able to make monopoly profits selling ideas to production firms, but the free entry
condition means that these profits are dissipated on R & D spending.
The new growth model has some implications which include:
(i) That policies which embrace openness, competition, change and innovation will promote growth.
(ii) That policies which have effect of restricting or slowing change by protecting or favouring particular
industries or firms are likely over time to slow growth.
(iii) That sustained economic growth is everywhere and always a
process of continual transformation.
(iv) That those economies which cease to transform themselves are
declined to fall off the path of economic growth. Various criticisms have been levelled against the
endogenous growth model.
One of the main failings of endogenous growth theories is the collective to explain conditional
convergence reported in the empirical literature. Another frequent critique concerns the cornerstone assumption
of diminishing returns to capital. Some content that new growth theory has proven no more successful than
exogenous growth theory in explaining the income divergence between the developing and developed worlds.
III. RESEARCH METHODOLOGY
The design adopted in this study is aimed at revealing the causal relationship between tax revenue and
economic growth in Nigeria. To achieve this objective, the study specifically employed the time series design.
This involves observing a single group at different times (Ndiyo, 2005).
To estimate the time series data collected, the study employed the classical Ordinary Least Square (OLS)
regression technique in the estimation of the relevant data.
3.1 Model Specification
The starting point of the model building for this study is the neo-classical growth model, which is expressed as
Y = f (L, K, A) . . . . . . . . . . . . . . . . . . . . . . (1)
Where:
Y = Output
L = Labour input
K = Capital Input
A = Index of technology or efficiency index Apart from the traditional variables captured
in the model above, other growth enhancing variables can also be captured and included in the model. For this
purpose, other growth determinants such as tax revenue domestic investment, foreign direct investment and
labour input are included in the model.
The neo-classical growth model in the expanded form can be expressed as:
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GDP = (LAB, DINV, FDI, TAXREV) . . . . . . . . . . .(2)
Where:
GDP = Gross Domestic Product, measuring economic growth.
LAB = labour input in Nigeria
FDI = Foreign Direct Investment
TAXREV = Tax revenue in Nigeria
The econometric form of the model can be written as:
GDP = bo + b1 LAB + b2 DINV + b3 FDI + b4 TAXREV + U . .. . . . . . . . . .(3)
The estimated linear form of the model when expressed in its log form can be expressed as:
Log (GDP) = bo + b1 log (LAB) + b2 (INV) + b3 log (FDI) + b4 log (TAXREV)
+ U . . . . . . . . .. (4)
Where:
bo = the autonomous interest
b1 to b4 = the coefficients to be estimated
U = the stochastic error term
The theoretical expectations about the signs of the coefficients are as follows:
bo >o, b1 >o, b2 >o, b3 >o, b4 >o
It is expected that the sign of the coefficient of labour should be positive.
This is because according to the neo-classical theory, an increase in the amount of labour input leads to
an increase in the level of output other things being equal. In the similar manner, the sign of the coefficient of
domestic investment is expected to be positive. This is because an increase in domestic investment will lead to
an increase in the gross domestic produced and hence growth.
Meanwhile, the sign of the coefficient of foreign direct investment is expected to be positive. This is
because an increase in the flow of foreign investment will lead to an increase in gross domestic product.
Lastly, the coefficient of tax revenue is expected to be positive. This is so because; an increase in tax
revenue provides the necessary revenue to the government to embark on growth promotion activities. Thus, the
higher the revenue collected from taxes, the higher will be the level of economic activities.
3.2 Technique of Data Analysis
The analysis of data proceeds using three main criteria, namely
(i) Economic a priori criteria
Economic a priori criteria are based on economic theory concern about the signs and magnitudes of the
parameter estimates in the model. It is based on the prediction that our model conforms to the relevant
economic theory. In other words, it has to do with determining whether the estimates conform to the
stated expected signs and magnitude of the parameters as provided by the relevant economic theory.
(ii) Statistical Criteria (first – Order – Test)
Statistical test is based on the theory of statistics and are used to ascertain the prediction power of the
model. It is also used to establish whether the parameters used in the model are statistically significant
and to also test for the statistical significances of the parameters of model.
The statistical measures used for testing the statistical significance include:
(i) t – statistics: this is used to decide whether the estimated parameters in the model are statistically
significant or not as a given level of significance before accepting or rejecting the null hypothesis.
(ii) R - Squared and Adjusted R – Squared: These are used to measure the goodness of fit of the estimated
model. They measure the proportion of the total variations in the dependent variable that is explained by
variations in the explanatory variables.
(iii) F – Statistics: This is the test for the existence of a significant liner relationship between the independent
variables taken together with the dependent variable. The F – statistics is specially used to test for the
overall significance of the estimated model.
(Econometric Criteria (second – order Test)
Econometric Criteria or second – order test are aimed at detecting the possible validity of some of the
assumptions on which the particular econometric method is based. Fir this study, the Durbin – Watson (D – W)
criterion is used to test for the absence or presence of autocorrelation in the model.
3.3 Data Sources
Secondary sources of data were used as the main data collection sources. Time series data collection
method was the main method of data collection. The relevant data for this study
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were collected from the Central Bank of Nigeria statistical Bulletin (various years) and Central Bank of Nigeria
Annual Report and Statement of Accounts. The study was based on time series data collected from the period
1970 – 2011.
IV. PRESENTATION OF RESULTS AND DISCUSSION OF FINDINGS
The results of the estimated model analyzed shows that tax revenue though having a positive impact,
did not affect economic growth significantly in Nigeria. This is the case where revenue realized from taxes is
spent on consumption instead of production.
The results also revealed that domestic investment has both positive and significant impact on
economic growth in Nigeria. This means that government policy to increase the rate and level of domestic
investment in Nigeria, will surely lead to a significant increase in economic growth.
Furthermore, the positive and significant relationship between foreign direct investment and economic growth
showed that the inflow of capital in form of investment has helped in bridging the resource gap and provided a
veritable source of investment in the country an increase in the flow of foreign investment has therefore led to
an increase in economic growth in Nigeria.
Finally, the positive and significant effect of labour input on economic growth shows that labour input
is an important input in the aggregate production function. The implication of this is that any government policy
to improve the quality of human resource will lead to an increase in economic growth in Nigeria. Utilizing data
for the periods covering from 1970 – 2011, the empirical result of the estimated model is as follows:
GDP = 505535.5 + 10.575 TAXREV + 6.486 DINV + 0.063 LAB + 5.138 FDI
SE (610190.5) (7.328) (0.787) (0.025) (2.395)
t Value (0.828) (1.424) (8.240) (2.49) (2.146)
R – Squared = 0.959
Adjusted R – Squared = 0.954
F – Statistic = 214.878
Durbin – Watson = 1.785
4.1 Analysis of Results
The empirical results of the estimated model above is analyzed using three criteria, namely economic
apriori criteria, statistical criteria and the econometric criteria.
Economic apriori criteria: The empirical results shows that all the explanatory variable have their correct
signs as theoretically expected. The estimated regression line has a positive intercept, represented by the
constant term, indicating that holding all explanatory variable constant gross domestic products will still
increase by 505535.5.
There is a positive relationship between tax revenue and economic growth. This is consistent with the
apriori expectation indicating that an increase in tax revenue by 1 billion naira will lead to an increase in
economic growth by 10.58 billion naira, other things being equal.
The result also shows that there is a positive relationship between domestic investment and economic growth in
Nigeria. This is consistent with the theoretical postulation, implying that a billion naira increase in domestic
investment will lead to an increase in economic growth by 6.48 billion naira, other things being equal.
Further examination of the result also shows that labour input is positively related to economic growth in line
with the neo-classical growth model. This means that a thousand increase in labour force will lead to an
increase in economic growth by 0.06 billion naira ceteris paribus.
Lastly, the empirical result shows that foreign direct investment has a positive relationship between
foreign direct investment and economic growth in Nigeria. This conforms to the theoretical postulate, indicating
that an increase in foreign direct investment by 1 billion naira will bring about an increase in economic growth
by 5.14 billion naira, other factors remaining the same.
Statistical Criteria:
This study employs the standard normal test i.e.
(Z - Test) because the sample size is greater than 30.
The Z - test is computed at 5% level of significance and at 5% level of significance, the t – statistic value
computed is 1.96. This value is then compared with the calculated value in the result obtained. If the calculated
value is greater than the critical value at 5% level of significance, then the particular parameter estimate is
statistically significant and vice versa.
From the results obtained, three explanatory variables are statistically significant at 5% level of significance.
These variables include domestic investment, labour force and foreign direct investment. The statistical significance
of these variables is that their t –statistic values calculated for domestic investment (8.24), labour force (2.49) and
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foreign direct investment (2.15) are all greater than the critical value of 1.96 at 5/5 level of significance. This means
that these variables are significant in explaining short-run variations in economic growth in Nigeria.
On the other hand, tax revenue is not statistically significant. This is because t- statistic value (1.420)
calculated is less than the critical value (1.96) at 5% level of significance. This shows that the variable is less
significant in influencing economic growth in Nigeria during the reference period. Adjusted R – Squared of 0.954
shows that about 95 percent of the systematic variations in the dependent variable (GDP) has been explained by
variations in the independent variables (TAXREV, DINV, LAB, FDI). The 5 percent left unexplained is due to
changes in other variables not captured in the model but represented by the disturbance term. The high value of
adjusted R – Squared shows that the estimated regression model has a good fit on the data.
Similarly, the high value of F – Statistics (214.88) shows that the overall model is statistically significant at
5% level of significance. This means that there exists a high degree of linear relationship between the dependent
variable and the independent variables in the model.
From the result obtained, the D – W value of 1.79 falls in the shaded region, representing the region of no
autocorrelation. Thus, it can be concluded that there is no autocorrelation among the variables in the model. Hence,
the model can be employed for policy formulation in the Nigerian economy in the short – run.
V. SUMMARY OF FINDINGS
The objective of this study was to examine the effect of tax revenue on economic growth in Nigeria.
From the results obtained, the following summary of findings are highlighted
i. The result showed that there is a positive relationship between tax revenue and economic growth in Nigeria.
However, the variable was not statistically significant in influencing economic growth in Nigeria.
ii. Domestic investment also has a positive relationship with economic growth, indicating that an increase in the
level and rate of investment will lead to an increase in the level of output and hence economic growth in
Nigeria. The variable apart from being theoretically consistent with a priori expectation was also statistically
significant.
iii. Further examination of the result also revealed that labour force has a positive relationship with economic
growth in Nigeria. This is in line with theoretical postulate. The variable was also statistically significant in
influencing economic outcomes in Nigeria during the reference periods.
iv. The empirical result further showed that there is a positive and significant relationship between foreign direct
investment and economic growth in Nigeria. This result is indeed consistent with a priori and theoretical
expectation.
v. The high value of adjusted R – Squared showed that the estimated regression line has a good fit on the data
and that the estimated model has high expandability power.
vi. In the same vein, the high value of F – Square showed that the overall model is statistically significant. This
also means that there is a high linear relationship between the dependent variable and the explanatory variable
in the model.
vii. Econometric test conducted using the Durbin – Watson statistic showed that there is no autocorrelation in the
model. The model therefore can be used for policy formulation in the Nigeria economy.
5.1 Policy Recommendations
Based on the results obtained, the following policy recommendations are made.
i. The positive relationship between tax revenue and economic growth calls for efficient tax policy to be
formulated and implemented so as it to continue to generate the needed revenue for the government. Also
revenue collecting authorities of the government should be made more effective in their operations of
collecting revenue for the government. Equally important is the need for the upgrading of revenue collecting
technique so as to be able to generate more tax revenue for the government.
ii. The positive and significant effect of domestic investment on economic growth in Nigeria calls for the
implementations of policies that will promote investment in Nigeria. Policies such as reducing the cost of
doing business should be implemented. Also basic infrastructures such as steady power supply, functional
transport systems and efficient water supply should be provided and made workable.
iii. The positive impact of labour force on economic growth equally calls for the implementation of policies which
will enhance labours productivity in the country. This can be done through the provision of more technical
education and continuous training of labourers.
iv. Finally, the positive and significant impact of foreign direct investment on economic growth calls for
appropriate policies to be adopted so as to attract more foreign investors in the country. The provision of
infrastructural facilities and the need to cut down the cost of doing business is a right steps in the right
direction.
VI. CONCLUSION
This study examines the effect of tax revenue on economic growth in Nigeria, from the periods 1970 to
2011. It is generally asserted that tax is a major source of government revenue all over the world because the
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revenue from tax aids the government in carrying out its responsibilities. However, the role of taxation in
promoting economic growth in Nigeria has not been significantly felt due largely to its poor administration.
The result obtained shows that tax revenue has positive effect on economic growth in Nigeria. A part from tax
revenue the result also shows that domestic investment, labour force and foreign direct investment have positive
and significant effect on economic growth in Nigeria.
It is important that efficient and effective tax policy be implemented to ensure that enough revenue is
generated for growth purposes. Policies to promote domestic investment should also be a implemented. Also
policies to improve labour productivity should be implemented and sustained. Lastly, there is need to institute
policies that will attract more foreign investors into the country. In this regard, the provision of basic and
functional facilities is the right step in the right direction.
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