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Empirical Analysis of Effect of Tax Revenue on Economic Development of Nigeria

Author

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  • Grace N Ofoegbu
  • David O Akwu
  • Oliver O

Abstract

The purpose of this study is to examine the effect of tax revenue on the economic development of Nigerian, and to ascertain whether there is any difference in using HDI and GDP in establishing the relationship. The approach adopted in this study was that of using annual time series data for the period 2005 – 2014 to estimate a linear model of tax revenue and human development index using ordinary least square (OLS) regression technique. Findings show a positively and significantly relationship between tax revenue and economic development. The result also reveals that measuring the effect of tax revenue on economic development using HDI gives lower relationship than measuring the relationship with GDP thus suggesting that using gross domestic product (GDP) gives a painted picture of the relationship between tax revenue and economic development in Nigeria. The researcher, therefore, conclude that tax revenue can be an instrument of economic development in Nigeria. Development of any tax policy on tax revenue for economic development should better be based on human development index rather than GDP. This study provides a useful insight for the government, stakeholders and policy makers into the importance of tax revenue for economic development as a result; income derived from tax should be judiciously used to encourage citizens to continue to pay tax.

Suggested Citation

  • Grace N Ofoegbu & David O Akwu & Oliver O, 2016. "Empirical Analysis of Effect of Tax Revenue on Economic Development of Nigeria," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 6(10), pages 604-613.
    • Handle: RePEc:asi:ijoass:v:6:y:2016:i:10:p:604-613:id:2842
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    Citations

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    Cited by:

    1. Olabisi Jayeola & Afolabi Adegboyega & Madariola Folasade Ajewole & Olagunju Adebayo, 2020. "Effect of Informal Sector Tax Revenue on Capital Development in Lagos Metropolis," Economics and Business, Sciendo, vol. 34(1), pages 1-14, February.
    2. Anwar Rashed Al Quraan, 2020. "General Sales Tax and Economic Growth in Small Open Developing Countries - Evidence from Jordan," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 16(3), pages 7-15.
    3. Temel Gurdal & Mucahit Aydin & Veysel Inal, 2021. "The relationship between tax revenue, government expenditure, and economic growth in G7 countries: new evidence from time and frequency domain approaches," Economic Change and Restructuring, Springer, vol. 54(2), pages 305-337, May.
    4. FASUA Henry Kehinde & MAYAKI Adeolu Thompson & ADEBAYO Sunday Fatoba, 2023. "Taxation Policy and Public Economic Growth and Development in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(4), pages 463-473, April.
    5. Kalaš Branimir & Mirović Vera & Andrašić Jelena, 2017. "Estimating the Impact of Taxes on the Economic Growth in the United States," Economic Themes, Sciendo, vol. 55(4), pages 481-499, December.
    6. Okere P.A. Ph.D & Uzowuru L.N Ph.D & Mbaeri C.C. Ph.D, 2022. "Fiscal Policy and Human Development in Nigeria (1986-2017)," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(5), pages 545-553, May.
    7. OGNERU, Victor, 2019. "Analysis Of The Relationship Between Tax Revenue And Gross Value Added In The Romanian Economy," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 23(2), pages 37-55, June.
    8. Sangaran Vijesandiran & Priyatharsiny Selvarasa, 2018. "Effects Of Fiscal Policy On Human Development In Sri Lanka: An Empirical Analysis," Journal of Smart Economic Growth, , vol. 3(3), pages 1-36, December.
    9. Theofanis Petropoulos & Yannis Thalassinos & Konstantinos Liapis, 2024. "Greek Public Sector’s Efficient Resource Allocation: Key Findings and Policy Management," JRFM, MDPI, vol. 17(2), pages 1-32, February.

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