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An Investigation on the Influence of Taxation on Economic Growth in Nigeria

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  • Tajudeen Adejare Adegbite

Abstract

This study examined taxation effects on economic growth in Nigeria. It also verified the causal direction amid economic growth and taxation engaging Johansen co-integration and the Granger causality tests method to analyse data collected from CBN statistical bulletin from 1970 to 2018. Results divulged that petroleum profit tax (PPTAX), company income tax (CORPT), and Value added tax (VATAX) have positive significant influence on GDP but Custom and Excise duties (CUSEXCD), has short run and long run positive insignificant influence on GDP. Taxation had causal nexus with GDP in Nigeria because VATAX, CUSEXCD, CORPT and PPTAX, jointly triggered GDP. Conclusively, taxation had short run and long run positive significant influence on economic growth in Nigeria. Also, bi-causality nexus existed amid Taxation and economic growth which translated that the existence of taxation income ignited economic growth in Nigeria, and economic growth also triggered taxation. It is postulated that government should lay much emphasis on the judicious utilization of cash inflow of taxation efficiently on economic growth so as to buttress the essence of fulfilling the civil responsibility by the taxpayers.

Suggested Citation

  • Tajudeen Adejare Adegbite, 2020. "An Investigation on the Influence of Taxation on Economic Growth in Nigeria," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 6(2), pages 12-20, June.
    • Handle: RePEc:khe:scajes:v:6:y:2020:i:2:p:12-20
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    References listed on IDEAS

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    1. Osman Cenk Kanca & Rahmi Yamak, 2018. "Effect of Average Tax Rates on Long-Run Economic Growth Rate in Turkey," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 14(5), pages 286-298, OCTOBER.
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    Cited by:

    1. Adegbite Tajudeen Adejare, 2020. "The Effects of IFRS Adoption on Taxation in Nigerian Manufacturing Companies," Financial Sciences. Nauki o Finansach, Sciendo, vol. 25(4), pages 1-15, December.

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      More about this item

      Keywords

      PPTAX; CORPT; VATAX; GDP; CUSEXCD;
      All these keywords.

      JEL classification:

      • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
      • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
      • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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