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The Nexus between Tax Revenue and Economic Growth in Nigeria


  • Edewusi, Damilola Gabriel

    (Department of Finance, Faculty of Management Sciences, Ekiti State University, Ado Ekiti, Nigeria)

  • Ajayi, Ibidolapo Ezekiel

    (Department of Finance, Faculty of Management Sciences, Ekiti State University, Ado Ekiti, Nigeria)


This study examined the nexus between tax revenue and economic growth in Nigeria. Specifically, the study evaluated the impact of petroleum profit tax on economic growth of Nigeria, assessed the effect of company income tax on economic growth of Nigeria and ascertained the influence of value added tax on the economic growth of Nigeria. The ex-post facto research design was employed; time series were collected data from the statistical bulletins of the CBN and the FIRS. The study’s model reflected variables including gross domestic product, petroleum profit tax, company income tax and value added tax. Data collated for these variables were analyzed to ascertain the short and long run effect of the variables using the Multiple Regression Analysis, Co-integration and other post estimation tests. Findings from the study indicated petroleum profit tax exerts a positive significant impact on economic growth with a coefficient an estimate coefficient of 3.707601(p=0.5150>0.05), company income tax also influences positively and significantly on economic growth with an estimating value of 55.79390 (p=0.2580>0.05) while the value added tax was also discovered to have a noticeable and positive effect on economic growth with reported coefficient estimates 16.04333 (p=0.5949>0.05). Following these discoveries, the study advocated that government should make efficacious the tax system of the country so as to curb practices that hampers the effectiveness of the system to generate the required revenue to cause a change in the growth of the economy and modify the institutional arrangement so as to aid a model for best practices of industries in the country.

Suggested Citation

  • Edewusi, Damilola Gabriel & Ajayi, Ibidolapo Ezekiel, 2019. "The Nexus between Tax Revenue and Economic Growth in Nigeria," International Journal of Applied Economics, Finance and Accounting, Online Academic Press, vol. 4(2), pages 45-55.
  • Handle: RePEc:oap:ijaefa:2019:p:45-55

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    References listed on IDEAS

    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
    2. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
    3. Mehmet Serkan Tosun & Sohrab Abizadeh, 2005. "Economic growth and tax components: an analysis of tax changes in OECD," Applied Economics, Taylor & Francis Journals, vol. 37(19), pages 2251-2263.
    4. Desai, Mihir A. & Foley, C. Fritz & Hines, James Jr., 2004. "Foreign direct investment in a world of multiple taxes," Journal of Public Economics, Elsevier, vol. 88(12), pages 2727-2744, December.
    5. ONAKOYA, Adegbemi Babatunde & AFINTINNI, Oluwatobi Ibukun, 2016. "Taxation and Economic Growth in Nigeria," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 4(4), pages 199-210, December.
    6. Ayodele F. Odusola, 2006. "Tax Policy Reforms in Nigeria," WIDER Working Paper Series RP2006-03, World Institute for Development Economic Research (UNU-WIDER).
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