Presentation by Daniya Abdulazeez at the second annual Nigerian Tax Research Network meeting which took place in Abuja on 24th and 25th November 2018.

1. IMPACT OF NON OIL TAX REVENUE ON
ECONOMIC GROWTH OF NIGERIA
BY:
Daniya Adeiza Abdulazeez
BSc, MSc, MBA and Ph.D (in view)
Department of Entrepreneurship and Business Studies, Federal
University of Technology, Minna, Niger State-Nigeria
GSM: +2348039733123
Email: daniyad3rd@yahoo.com
and
Prof Kabiru Isa Dandago
Department of Accounting, Bayero University, Kano-Nigeria
GSM: +2348023360386
Email: kidandago@gmail.com

2. 2
Outline of the Paper
Section one: Introduction
Section two: Literature Review
Section three: Methodology
Section Four: Results and Discussion
Section five: Conclusions and
Recommendations

3. Introduction
• All over the world, government strive to
provide enabling environment (security,
electricity, water, education, health and other
infrastructures) for businesses to thrive and
ensure total happiness of its citizens.
Achieving this civic responsibilities requires:
Stable revenue flow through tax
Well organized tax system (a case of
developed countries)
3

4. Introduction… Cont’d
• However, African countries particularly
Nigeria blessed with abundant natural resources
is still far behind among committee of nations
owing to:
Overdependence on oil (mono product
economy)
Inability to diversify (Dutch disease)
 poor tax drive
4

5. 5
Introduction… Cont’d
• The adverse effects of running a mono product (oil)
economy (The case of Nigeria)
 hydro carbon is a non renewable resource
 Price dictated at world level
 Crash in the world oil price (A big blow to the
economy of Nigeria)
 Economic recession in Nigeria (2016)
• Nigeria now thinking outside the box
(Diversification-intensified efforts, national discuss and 2017
National Tax Policy) Tax revenue such as: VAT, CIT,
C&ED. A well organized tax system from assessment,
collection, remittances to utilization is said to have
remarkable effect on the health of nation’s economy (David

6. 6
Introduction… Cont’d
• The focus of Previous studies has been on individual non
oil tax revenue particularly VAT
• There are limited number of studies to the best our
knowledge that examined the combined effect of non oil
tax revenue on economic growth of Nigeria. For instance,
 Inyiama and Ubesie (2016) and Akhor, Atu and Ekundayo
(2016) VAT, C&ED and GDP
 Focus of this study (Main objective): Non-oil tax (VAT,
CIT, C&ED) on GDP (1994-2017)
 Specific Objectives- VAT & GDP, CIT & GDP and
C&ED & GDP
 Hypotheses are also formulated in the above order, all in
null forms

7. Literature Review
• This section is in three segments: Conceptual,
theoretical and empirical reviews respectively.
• Concepts:
 Taxation: Fiscal measure and a compulsory non
penal levy imposed by government
 Purpose: Revenue generation, Income
redistribution and Price/Economic stability (Fiscal
Policy).
• Principles: Certainty, Equity, Economy and not
counter-productive
• Administration: Federal 8, State 11 and 20 Local
government (Decree 21 of 1998 tax law of the
federation) 7

8. Non-Oil Tax Revenue
• Value Added Tax (VAT). An indirect consumption
tax introduced by decree 102 of 1993 effective from
January 1994 to replace sales tax. A major source of
revenue to the government. Easy to collect, unselective,
difficult to evade and almost next to no cost of collection .
• Company Income Tax (CIT). This charged at the
rate of 30% on the profit earned by companies registered
in Nigeria. Rationale for CIT – Company’s Goal(s) Vs.
Government civic responsibilities. Creating and
strengthening a symbiotic relationship.
• Customs and Excise Duties (C&ED). Indirect tax
levied on goods and services crossing a nation’s border as
well as those produced locally. Revenue generation Vs
International Business Policy aimed at growing the
economy 8

9. Improving Non-Oil Tax Revenue in Nigeria
 Tax Identification Number (TIN). e-registration of
taxpayers. Knowing the taxpayers
 Tax Amnesty Programme
 VAIDs (2017) Declaration of assets and income for the
purpose of paying outstanding tax liabilities.
 Improving revenue base via e-auctioning and
immediate remittance to federation account
 Faithfulness on the part of government
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10. Economic Growth
• Economic Growth. An increase in the total
value of goods and services measured by GDP.
• Since taxation is a proportion of profit/income
earned from productive activities paid to the
government, a relationship is said to exist
between Taxation and GDP
10

11. Theoretical & Empirical Review
• Theoretical Review
 Ability to pay (Fair Tax)
 Benefit theory (Benefits derived as basis for tax
payment)
 Cost of Service Theory (Semi-commercial
relationship)
• Empirical Review
 VAT (No consensus)
 CIT (Consensus)
 C&ED (No consensus) 11

12. Methodology
• Research Design- Ex-post facto
• Data Sources – FIRS and NCS report and CBN
statistical bulletin
• Variables: DV – Economic growth proxy by GDP, IV –
Non-oil tax revenue with VAT,CIT and C&ED as proxies
Method of data analysis – Descriptive statistics,
correlation, several robustness tests and ARCH model
regression for data analysis
Model - GDPt =β0+ β1VATt + β2CITt β3CEXDt + μ
12

13. Results and Discussion
Descriptive Statistics
Variables Mean Std. Dev. Minimum Maximum
GDP 54.58274 9.061985 39.29 73.25098
CIT 25.96162 1.528353 23.23081 28.19377
VAT 16.72063 2.434733 12.76 23.29159
C&ED 21.11696 2,008883 17.92201 24.52419

14. Results and Discussion Cont’d
Correlation Matrix
GDP CIT VAT C&ED
GDP 1.0000
CIT 0.9698 1.0000
VAT 0.8487 0.7733 1.0000
C&ED 0.4498 0.3403 0.4868 1.0000
Each explanatory variable (CIT, VAT, and C&ED) are positively correlated with
the explained variable (GDP). The explanatory variables are not themselves
highly correlated. Robustness Tests- no multicollinearity, data set are normally
distributed, stationary, independent but hetroskedastic.

15. ARCH Model
Var. GDP GDP GDP GDP
CIT 5.789914
(0.000)***
4.669338
(0.000)***
VAT 3.141135
(0.000)***
0.7377415
(0.002)***
C & ED 2.543012
(0.008)***
0.3845294
(0.147)
R2 0.9405 0.7263 0.2874 0.9701
P. Value 0.0084 0.0000 0.0000 0.000
CIT on GDP - Margaret et al. (2014), Adegbite (2015) and Lyndon and
Paymaster (2016)- Null hypothesis rejected
VAT on GDP –Omeora (2013), Apera and Durojaiye (2016) and Patrick et al.
(2017) but not in agreement with Lawrence (2015) a study carried out in kenya-
Null hypothesis rejected -
C&ED on GDP – Cornelius et al (2016) but not in agreement with Inyiama and
Ubesie (2016) - Null hypothesis accepted

16. Conclusions & Recommendations
Conclusions
• The study examined the impact of non-oil tax revenue on the
economic growth of Nigeria for a period of twenty four (24) years
(1994-2017) and has carefully reviewed relevant literature and
deployed appropriate methodology to achieve the objective of the
study
• Lesson from sequential regression.
• Major findings on the variables CIT, VAT, C&ED and GDP

17. Recommendations
• Government should continuously mount pressure on
FIRS for more robust CIT and VAT revenue through: the
extension of VAIDs for five (5) years with a
commensurate penalty for non compliance, routine tax
audit particularly on companies and sustain the e-platform
for taxpayers registration and remittances to capture more
persons and organizations into the tax net.
• With respect to Customs and Excise Duties, government
should strengthened patrol and surveillance system
around Nigeria borders by officers of proven records of
integrity, maintain fair tariff to dissuade smuggling
activities, fish out the ‘bad eggs’ who use their positions
for personal benefit.
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