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Effect Of Tax System On Economic Growth In Nigeria

Author

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  • HENRY KEHINDE FASUA
  • JOY OSAGIE

Abstract

This research explores the impact of the tax system on the economic growth of Nigeria. The study utilized data extracted from annual financial reports of the Central Bank of Nigeria, focusing on indicators like Gross Domestic Product, Petroleum Profit Tax, Value Added Tax, and Company Income Tax. The chosen timeframe spans 28 years, encompassing the years 1984 to 2021, aiming to assess how the tax system influences economic growth in Nigeria. To analyze the data, the researchers employed an Autoregressive Distributed Lag (ARDL) technique and conducted preliminary tests before the main analysis. The outcomes of the research indicate that all the explanatory variables (Petroleum Profit Tax, Value Added Tax, and Company Income Tax) exhibit positive effects on the dependent variable (Gross Domestic Product). However, the impact of Petroleum Profit Tax was found to be statistically insignificant. Based on the findings, the study concludes that there exists a noteworthy positive relationship between the tax system and economic growth in Nigeria. Consequently, the research recommends that all sectors adhere to established tax policies and standards to minimize tax avoidance and evasion. This, in turn, could lead to an increase in overall government revenue.

Suggested Citation

  • Henry Kehinde Fasua & Joy Osagie, 2024. "Effect Of Tax System On Economic Growth In Nigeria," Journal of Academic Research in Economics, Spiru Haret University, Faculty of Accounting and Financial Management Constanta, vol. 16(2 (July)), pages 357-374.
    • Handle: RePEc:shc:jaresh:v:16:y:2024:i:2:p:357-374
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    Keywords

    Tax System; Economic Growth and GDP.;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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