An Emperical Analysis of Tax Revenue and Economic Growth in Nigeria from 1980 To 2015

Abstract

The contribution of taxation to any economy globally is so much in terms of quantification and cannot be therefore be ignored as unimportant It is a source of revenue or income to the government be it the Central State or Local government in achieving their macro-economic objectives in the areas of fiscal and monetary policies For Nigerian government to effectively carry out its primary function and other subsidiary functions she requires adequate funding Government responsibilities has continued to increase over time especially in developing countries like Nigeria due to the increasing nature and size of her population and infrastructural deterioration This study was therefore poised to empirically examine the tax revenue and economic growth in Nigeria from 1980 to 2015 by employing Gross Domestic Product GDP as the dependent variable and Petroleum Profit Tax PPT Company Income Tax CIT and Customs and Excise Duties CED as the independent variables The analysis of the study was carried out using the method of Multiple Regression Analysis The Ordinary Least Square OLS method of econometrics was the main analytical technique that was employed using Econometric software E-Views 9 0 Our broad objectives were to examine the relationship that exists between Petroleum Profit Tax Company Income Tax Customs and Excise Duties and Economic Growth in Nigeria The Cointegration results revealed that there was a long-run relationship among the variables The short run regression result also revealed that Petroleum Profit Tax and Company Income Tax has no significant relationship with economic growth in Nigeria Custom and Excise Duties was found to have a significant relationship with Economic Growth in Nigeria during the period under study The study therefore concluded that government should ensure that tax revenue is used judiciously to make expenditures on Education Housing Ttransportation Aagriculture Health Power Road construction Natio