Moderating Effect Of External Debt On The Impact Of Tax Revenue On Nigeria Economic Growth

Every economy of the world needs revenue in order to develop sustainably and thereby take position in the comity of nations. Studies have shown that the economic growth of nations all over the world depends largely on the revenue generated from a well - structured tax system. However, Nigeria's overdependence on oil for foreign exchange has adversely affected the sustainable growth of the nation. This has made the need to diversify the revenue base of the county to be very obvious. On this basis, this study evaluated the effect of tax revenue on Nigeria economic growth within 1997-2017. The study employed the ex-post facto research design. The sample size consisted federally collected taxes paid by the corporate tax payers and economic growth in Nigeria proxied by real gross domestic product (RGDP), while external debt was introduced as a moderating variable from 1997 to 2017. Data were sourced from government reports validated by their respective regulatory bodies. Descriptive and inferential statistics were adopted for data analysis. The findings revealed that tax revenue had a significant effect on the economic growth in Nigeria (F=2502.02, Adj. R2 = 0.999, P-value = 0.0000). The Petroleum Profit Tax (LOG(PPT)) has significant positive effect on GDP in the long-run. [Coef.=0.269; R2=0.996; P-value=0.000; t=7.635], Companies Income Tax (LOG(CIT)) has a significant positive effect on GDP in the long run [Coef.=0.296; R2=0.996; P-value=0.000; t=31.933]; Value Added Tax (LOG(VAT)) has a significant positive effect on GDP in the long run [Coef.=0.296; R2=0.999; P-value=0.000; t=44.668] and Customs and excise duties (LOG(CUS) has a significant positive effect on GDP [Coef.=0.296; R2=0.995; P-value=0.000; t=8.604]. The study concluded that tax revenue influences economic growth and determines long-run economic growth. The study finds that Value Added Tax (VAT) and Customs and excise duties (CUS) are the determinants of short-run economic growth. The study recommended among others that government and all relevant tax relevant authorities should formulate appropriate policies in order to: encourage citizens to pay taxes as at when due, ensure appropriate utilization of the taxes collected, Improved capacity for the government agencies to formulate and implement sound tax policies effectively