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Impact of Tax Revenue on Economic Development in Nigeria

Author

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  • Uket E. Ewa
  • Wasiu A. Adesola
  • Etim N. Essien

Abstract

There has been conflicting preposition as to the extent of tax contribution to the development of Nigerian economy. This study is to determine the impact of taxation proceeds on the development of Nigerian economy. The study explored the impact of three tax income streams – Income tax from companies’ profits, income tax from petroleum companies profits and Value Added Tax on economic development represented by Gross Domestic Product (at current basic prices) growth for the period 1994 to 2018. The study applied Ordinary Least Square statistical tool with the help of SPSS 20.0. The study revealed a positive relationship with a coefficient of determination of 99.2% of the variation in economic development attributable to the tax income streams studied. Also although the study revealed the existence of significant effect of taxes from companies’ profits and Value Added Tax on Gross Domestic Product Growth, there is little or no significant impact of taxes on profits of Petroleum companies on Gross Domestic Product growth in Nigeria due to restriction by Organization of Petroleum Exporting Countries production ceiling on Nigeria’s production/sales and the global price shocks of crude oil over the decade. Also the study revealed tax payers apathy to tax payment and presence of tax leakages due to corruption and administrative inefficiencies by the tax authorities.

Suggested Citation

  • Uket E. Ewa & Wasiu A. Adesola & Etim N. Essien, 2020. "Impact of Tax Revenue on Economic Development in Nigeria," International Business Research, Canadian Center of Science and Education, vol. 13(6), pages 1-1, June.
    • Handle: RePEc:ibn:ibrjnl:v:13:y:2020:i:6:p:1
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    References listed on IDEAS

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    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    2. Moses Nnoruga Okeke & Chikwelu M. Mbonu & Amahalu Nestor Ndubuisi, 2018. "Tax Revenue and Economic Development in Nigeria: A Disaggregated Analysis," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 8(2), pages 178-199, April.
    3. Maryann P. Feldman & Johanna L. Francis, 2003. "Fortune Favours the Prepared Region: The Case of Entrepreneurship and the Capitol Region Biotechnology Cluster," European Planning Studies, Taylor & Francis Journals, vol. 11(7), pages 765-788, October.
    4. Gareth D. Myles, 2009. "Economic Growth and the Role of Taxation-Theory," OECD Economics Department Working Papers 713, OECD Publishing.
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    Cited by:

    1. Adegbola Olubukola Otekunrin & Samuel Adeniran Fakile & Damilola Felix Eluyela & Ademola Andrew Onabote & Okoye Nonso John & Sarah Ifeanyichukwu, 2023. "Impact of Oil and Non-oil Tax Revenue on Economic Growth in Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 545-552, March.
    2. Ifeoma Osamor & Godwin Omoregbee & Fadekemi Ajasa-Adeoye & Josephine Olumuyiwa-Loko, 2023. "Tax Revenue and Economic Growth: Empirical Evidence from Nigeria," Journal of Economics and Behavioral Studies, AMH International, vol. 15(1), pages 15-26.

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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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