However, the results emanating from these studies have been inconclusive. Ofurum et al impact of etaxation on nigerias revenue and economic growth. This paper examines the causal relationship between globalization and economic growth in nigeria from 1981 to 2012. Tax compliance here is proxied in willingness of the citizens to pay tax. Department of economics, banking and finance, babcock university, ilishan remo, ogun. An overview of the nigerian economic growth and development. As africas most populous country, nigeria boasts of the continents second largest oil reserves and has a very promising growth outlook. Being among the main guides by whom development and growth ought to be measured in any civilization is the extent of wealth, which is generated by economic undertaken in that society. Nigeria recent economic developments the performance of the nigerian economy was mixed in 2001. The paper examined the impact of tax revenue on economic growth in nigeria from 1980 to 2015.
The cointegration results revealed that there was a longrun relationship among the variables. Economic development implies improvements in a variety of indicators such as literacy rates, life expectancy, and poverty rates. The analyses were performed using data from cbn bulletin, nse fact book and firs annual report for an eleven. The effects of tax revenue on economic growth in nigeria1970. Few, ifany have examined this line of research in nigeria. The effect of fiscal policy on economic growth in nigeria. One of the major functions of the government especially developing countries such as nigeria is the provision of infrastructural services such as electricity, schools, hospitals, pipeborne water, good roads and as well as ensure a rise in percapital income, poverty alleviation to mention a few. Further effort was made to check the causality relationship that exists between the two variables by employing the vargranger causality at two different lag periods. Some researchers estimated the effect of tax revenue on the economic development of nigeria using gross domestic product gdp. This is followed by section 3 which harps on the methodology and data for analysis. This study examines the impact of company income tax on economic growth in nigeria.
Value added tax and economic growth in nigeria john chika. Nigeria has enjoyed relatively strong economic growth over the past seven years but poverty is still a major concern. These findings suggest that the government should use tax revenue judiciously to improve infrastructure supporting facilities and thus engender economic growth in nigeria. The study examines the macroeconomics determinants of economic growth in nigeria measured by real gross domestic product rgdp. Exports and government revenues are driven largely by oil, while most nigerians work in agriculture. Augmented dickeyfuller adf test was used for the unit root test and johansens cointegration test was also conducted to. The effects of tax revenue on economic growth in nigeria. This study is undertaken to examine the contribution of the capital market in the nigerian economic growth and development. Taxation and economic growth in nigeria request pdf. Impact of etaxation on nigerias revenue and economic growth. In this chapter, we examine the relationship between taxation and economic growth in a resource rich country, using nigeria as a case study. World bank and pwc 2015 3 paying taxes survey in 2005 revealed that taxpayers are able to file tax returns electronically in about 45% of the countries. May 02, 2015 the study examined the effect of tax compliance on economic growth and development in nigeria.
The aim was to increase the revenue base of government and make funds available for developmental purposes that will accelerate economic growth. The data collected from secondary sources, were analyzed and tested for unit. This study examined the impact of etaxation on nigerias revenue and economic growth. Infrastructure development and economic growth nexus in nigeria. In nigeria some authors had examined the performance of foreign trade and economic growth. Request pdf on jan 1, 2016, adegbemi babatunde onakoya and others published taxation and economic growth in nigeria find, read and cite all the. The general objective of the study is to investigate the impact of vat on the economic growth of nigeria. Value added tax vat was introduced by the federal government of nigeria in 1993 to replace sales tax. The dwindling price of crude oil has lowered the revenue generation to government thereby, impacting negatively on the nigeria economic growth. Taxation is acknowledged as a very essential instrument for national development and growth in many societies and nations in the world over centuries. A lot of literature exists on tax revenue and economic growth of nigeria adereti et al. The finding revealed that there is a significant relationship between petroleum profit tax and the growth of the nigeria economy. Impact of taxation revenue on economic growth of nigeria.
In theory, proponent of oilled development for example yakubu 2008 and hoffman 1999 believes that countries lucky enough to have petroleum, can base their development on this resource. They found that various tax reforms are positively and significantly related to economic growth and that tax reforms granger cause economic growth. The direct and indirect effects of declining crude oil prices, combined with other supply side issues are of course the most important factors that have led to our economic growth slowing to about 3% in 2015, the slowest growth since 1999. The paper empirically examined the contribution of vat to the development of the nigerian economy. The main objective of the study is to investigate the impact of taxation revenue on nigeria economic growth. The economy maintained its moderate rate of growth with real gdp growth of 3. Effect of value added tax, customs and excise duties on. It was found out from the study of 73 countries over. Welfare effects of taxation on the nigerian economy osundina c.
Existence of manual system of tax administration in her operations. The effect of tax compliance on economic growth and. Pdf company income tax and nigerian economic growth. The impact of taxation on nigeria economy growth projectclue. Taxation and economic growth in nigeria asian economic and. Time series data was used and sourced from the cbn statistical bulletin and annual reports. Secondary sources were explored in data gathering while simple regression technique was employed in data analysis for test of the study hypotheses. The result of the test showed that for the periods, 19702005, there was no cointegrating relationship between inflation and economic growth for nigeria data. Infrastructure development and economic growth nexus in.
The short run regression result also revealed that petroleum profit tax and company income tax has no significant relationship with economic growth in nigeria. At that tax rate, the economic growth rate would be around 6% and 8%. In these studies, researchers used economic development and economic growth interchangeably. This involves observin g a single group at different times nd iyo, 2005. Evaluate the effect of tax revenue on infant mortality im in nigeria. To this end, the government opted for other alternative source of growing her economy through taxation. An expost facto investigation seeks to reveal possible relationships by observing an existing condition or state of affairs and searching back in time for plausible contributing factors. Ogbonna and ebimobowei 2012 examine the impact of tax reforms and economic growth in nigeria using relevant descriptive statistics and econometric analysis. The main objective is to analysis how various components of fiscal policy have contributed to the growth rate of the nigerian economy. The objective of this study is to investigate the impact of taxation on economic development of nigeria proxy by the gross domestic product gdp. Credit flows and the fiscal stance are found to play a significant role in determining the trade. Government spending and economic growth in nigeria. Nigeria with the much needed capital for investment which improved economic growth. In the same vein, olawunmi and ayinka 2007 examined the contribution of fiscal policy in the achievement of sustainable economic growth in nigeria using slow growth model estimated with the use of ordinary least square method.
This study uses secondary data which were obtained from the statistical bulletin of the central bank of nigeria cbn covering the period from 1985 to 2015. The impact of taxation on revenue generation in nigeria. Increase in savings leads to increase in capital formation and production activities that will lead to employment creation and reduce external borrowing of government. Taxation and economic growth in a resourcerich country. Value added tax and economic growth in nigeria john chika onwuchekwa department of accounting, rhema university, aba, abia state, nigeria suleiman a. At this stage, however, there is little agreement about federal reserve board, washington. To investigate the relationship between the changes of vat revenue on the economic growth of nigeria 3. However and in contrast to the above, sekou 2015 in his study utilised ordinary least square method to estimate. This study investigated the effect of fiscal policy on economic growth in nigeria. Identify the effect of tax revenue on labour force lf in nigeria.
Even after some tax policies the tax authority has put in place over the few years such as the e payment scheme, tax identification number. May 03, 2016 the research was adopted to examine the effect of fiscal policy on economic growth in nigeria. Abstract the contribution of taxation to any economy globally is so much in terms of quantification and cannot be therefore be ignored as unimportant. The broad objective of this study is to ascertain the effect of tax revenue on economic development in nigeria.
Aruwa, phd department of accounting, nasarawa state university, keffi abstract. The role of taxation in promoting economic growth in nigeria is not fully felt, and. Taxation and economic growth in nigeria semantic scholar. Value added tax vat is a consumption tax, levied at each stage of the consumption chain and borne by the final. An emperical analysis of tax revenue and economic growth. Umoh introduction this article overviews the growth and development of the nigerian economy from inde pendence to present times.
For instance, oyejide 1974, using nigeria, as a laboratory test ground that an increase in export proceeds could lead to an expansion. The role of taxation in promoting economic growth in nigeria is not fully felt, and optimal tax is not been realized that can engine economic growth primarily because of its poor administration. To achieve this ob jective, the study spec ifically employed the ti me series design. The study examines the effect of value added tax and customs and excise duties on nigeria economic growth. Also, most of the typically scanty empirical attempts have been, in the main, conducted at the crosscountry levels, thus, making it quite difficult to extrapolating to countryspecific cases. Broadly, the study focused on tax revenue and economic growth in nigeria. However, one means of generating the amount of revenue for providing the needed infrastructure is through a well.
Taxation and economic growth in nigeria ideasrepec. This is because tax revenue is an important instrument for economic growth and development in many developing economies like nigeria, since the internal revenue generated. We used time series data obtained from cbn for a period of 26 years that is 1986 to 2012. However, one means of generating the amount of revenue for providing the needed infrastructure is through a well structured. Also, tax revenue should be judiciously utilized to provide enabling environment for business survival and economic growth in nigeria.
The seeming unchanged economic situation has made many nigerians to question the reliability of the fiscal policy in solving the present and escalating economic problems the nation is facing. Inflation and economic growth in nigeria omoke journal. Chelliah 1989 observed that an increase in indirect taxation compared to direct taxation reduces economic growth more. World bank and pwc 2015 3 paying taxes survey in 2005 revealed that taxpayers are able to file tax returns electronically in about 45% of the countries that were surveyed. Ascertain the effect of tax revenue on gross fixed capital formation gfcf in nigeria. Over several decades, taxation has been taken as a veritable medium of engineering the growth or performance of an economy. In conclusion,after a proper explanation of the various taxes paid in nigeria,what the levels of government can ask for,what the taxes collected by government is used for. The impact of indirect tax revenue on economic growth. The stationarity of the variables were tested using. To observe the growth pattern of vat revenue and gdp 2. A mutual correlation exists between infrastructural development and economic growth in nigeria. The direct and indirect effects of declining crude oil prices, combined with other supply side issues are of course the most important factors that have led to our economic growth slowing to about 3%. What taxation can and cannot do by taiwo oyedele a bill seeking to amend the companies income tax act cap c21 lfn 2004 to, among other things, make provisions for tax incentives for economic growth and creation of employment opportunities is currently under consideration by the national assembly.
Ogbokor 2001, investigated the macroeconomic impact of oil exports of oil exports on the. Impact of etaxation on nigerias revenue and economic. They point to the potential benefits of enhanced economic growth and the creation of. Ogbokor 2001, investigated the macroeconomic impact of. An emperical analysis of tax revenue and economic growth in. The study examined the effect of tax compliance on economic growth and development in nigeria. Nigeria has over the years been controlling her economy through various. The study further looked at the relation between companies income tax cit, petroleum profit tax ppt and gross domestic product in the postifrs period. The achievement of macro economic objective of full employment, stability of price level, high and sustainable economic growth from time immemorial has been a policy priority of every economy such as nigeria given the susceptibility variables to fluctuations in the economy.
Ii, issue 4 july 20 appropriate policies, the relationship between government spending and economic growth can be maintained in the positive direction. This study examined the impact of indirect taxes on economic growth of nigeria, utilizing time series data spanning a thirtyfour year period, from 1981 to 2014. At that tax rate, the economic growth rate would be around 6% and 8% instead of the actual mean growth rate of 2. Personal income tax pit and economic growth in nigeria. I hope the readership have been properly educated on the role of taxation in the nigerian economy. Saibu 2015 adopted the model developed by scully 2003 for cote divoire. The study made use of expost facto research design. It showed that there is a significant relationship between non oil revenue and the growth of the nigeria economy. Welfare effects of taxation on the nigerian economy. Nigeria was one of the fastest growing economies in the world. Economic growth is constrained by inadequate infrastructure, electricity, incentives, and policies that promote private sector development, and poor access to quality education. Many of them have covered all its ramifications while some have effectively appraised the problem of tax administration in.
Macroeconomic determinants of economic growth in nigeria. Section 4 presents the data analysis and discussion of. There have been several studies that have investigated the relationship that exist between infrastructure development and economic growth. However, the vital role of the capital market in economic growth and development has not been comprehensively investigated thereby creating a research gap in this area. Department of economics, banking and finance, babcock university, ilishan remo, ogun state, nigeria 2. Company income tax has significant effect on the gross domestic product of nigeria and customs and excise duties have significant effect on the. Given that the purpose of introducing electronic tax system is to improve revenue collection which will in turn improve the countrys economic growth, the study empirically examined how the implementation of etaxation in 2015 has affected tax revenue, federally collected revenue and taxtogdp ratio. The roles of value added tax in the economic growth of.
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