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. However, one means of generating the amount of revenue for providing the needed infrastructure is through a well. Government imposes levies on individuals, companies, organisations in the form of tax so government machinery. Yearly data for south africa for the period 1981 2016 was used to develop the autoregressive distribution lag ardl approach. The study examined the effect of tax compliance on economic growth and development in nigeria. That is, the components or mechanism of taxation are together insignificant in impacting on economic growth in nigeria.
To examine the relationship between value added tax and revenue generation in nigeria to establish the effects of value added tax on revenue generation in nigeria 1. This study was designed to investigate the tax revenue and nigerian economic growth for period of three decade, using time series data from 1986 to 2015. This paper examines taxation as an instrument of economic growth in nigeria. The impact of taxation as an aid to economic development includes abstract and chapter one, complete project material available the impact of taxation as an aid to economic development in edo statea case study of oredo local government area, edo state, nigeriaproposalthe research work will discuss in detail the impact of taxation as an aid to.
The impact of taxation is integrated into growth models by its impact on the individual growth variables, which are capital accumulation and investment, human. 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. In a similar study, edame and okoi 2014 examined the impact of taxation on investment and economic development in nigeria, using data covering the period 1980. The effect of taxation on nigeria economy project topics. It is not farfetched that taxation has a positive role, and is an engine to the economic growth of nigeria.
Jan 29, 2015 the aim of this paper is to evaluate the impact of individual types of taxes on the economic growth by utilizing regression analysis on the oecd countries for the period of 20002011. A study on the effect of tax revenue on economic growth and development in nigeria is justified based on the need for the various level of government in nigeria to ensure continuous economic growth and development through the utilization of tax revenue from various taxes ranging from petroleum profit tax, company income tax, custom and excise. 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. This study examines the impact of taxation on investment and economic growth in nigeria from 19802010. Unit root test was conducted using augmented dickeyfuller test technique and the result showed that the variables were stationary though at different levels. The study adopted a descriptive and historical research. They therefore concluded that taxation is an instrument of economic growth in nigeria. Impact of taxation revenue on economic growth of nigeria. Given that the purpose of introducing electronic tax system is to improve revenue collection which will in turn improve the countrys economic growth, the. The ordinary least square method of multiple regression analysis was used to analyze the data. Integration of taxation into the neoclassical growth theory and selected ways of tax burden approximation. Relevance of tax revenue resources to infrastructural. The general objective of this study is to examine the impacts of value added tax on revenue generation in nigeria.
Pdf the dwindling price of crude oil has lowered the revenue generation to government thereby, impacting negatively on the nigeria economic growth. In nigeria, tax revenue has accounted for a small proportion of total government revenue over the. In a similar study, edame and okoi 2014 examined the impact of taxation on investment and economic development in nigeria, using data covering the period 1980 2010. The main objective of the study is to investigate the impact of taxation revenue on nigeria economic growth. Several arguments have trailed the relevance of taxation resources as a tool for enhancing infrastructural development in nigeria, some scholars submit that the quantum of tax resources. 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. Impact of tax revenue on economic growth in nigeria. Using annual time series data sourced from the central bank of nigeria cbn statistical bulletin during the period 1980 through 20, a linear model of corporate income tax cit, value added tax vat and economic growth gdp was.
Econometric analysis of time series data from central bank of nigeria was conducted. Taxation plays a very important role in the economic life of a developing country like nigeria. 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. The need for tax payments has been a phenomenon of global significance as it affects every economy irrespective of national differences oboh and isa, 2012. Impact of etaxation on nigerias revenue and economic. Working papers from the economics department of the oecd that cover the full range of the departments work including the economic situation, policy analysis and projections. The study investigated the impact of tax revenue on economic growth in nigeria, annual time series data were obtained from the central bank of nigeria statistical bulletin for the period 1981 to 2015 on the variables used for the study. Today, nigeria is indeed in dire need of effective and efficient tax system in order to generate enough revenue that will stimulate economic growth and development oji, 2000. Based on the differences in opinions and empirical findings, it is therefore necessary to investigate the impact of tax. The annual data were sourced from the central bank of nigeria statistical bulletin and nbs.
When evaluating the impact of fiscal variables on economic growth, it is necessary to derive from the fact that taxation influences economic growth solely through its impact on individual growth variables kotlan, machova and janickova, 2011. The scope of this study covers the impact of tax revenue on the nigerian economic growth over a period of 31 years from 19812010. It was found that fiscal policy has not been effective. This study on taxation as a tool for economic growth in nigeria covers the period from 2007 to 2016. The relationship between indirect taxation and economic growth has been examined severally by different researchers. The result also, revealed a significant positive relationship at 5% level of significance between petroleum profit tax, company income tax and economic growth, but a negative relationship between economic growth and customs and excise duties. According to nzotta 2007, four key issues must be understood for taxation to play its functions in the society. First, a tax is a compulsory contribution made by the citizens to the government and this contribution is for a general common use. Taxation as an instrument of economic growth the nigerian. In the same vein, olawunmi and ayinla 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 ols method. Pdf pthe study examined the relationship between tax revenue and economic growth in nigeria.
The effect of tax compliance on economic growth and. This study examined the impact of e taxation on nigeria s revenue and economic growth. This study examined the impact of etaxation on nigerias revenue and economic growth. Economic growth is the growth of an economys output of goods and services which is. Custom and excise duties has no significant impact on nigerian economic growth.
Value added tax has no significant impact on nigerian economic growth. At this stage, however, there is little agreement about federal reserve board, washington. Economic development encompasses policies that governments undertake to meet broad economic objectives such as price stability, high employment, expanded tax base, and sustainable growth. In these studies, researchers used economic development and economic growth interchangeably. Similar finding which indicate that low income tax rates boosted the economic growth was reported by bonu and pedro 2009 who utilized descriptive technique in botswana.
The need for tax payments has been a phenomenon of global significance as it affects every economy irrespective of national differences oboh and. An empirical study on the causality between economic growth and taxation in nigeria. May 02, 2015 the study examined the effect of tax compliance on economic growth and development in nigeria. In simulations of economic growth models the effect of taxation on growth has frequently been demonstrated to be considerable. The impact of taxation on economic growth in south africa. The significant issues that must be considered to determine and understand the diverse effects of taxation in the goal and objective of achieving a diversified economic growth and development with stability in all sectors of the economy of nigeria includes. Secondary sources were explored in data gathering while simple regression technique was employed in data analysis for test of the study hypotheses. On the basis of the findings, the study recommends among other issues that improvement in tax regimes, removal of distortions in taxation, discouragement of tax holidays to mncs and diversification of revenue base as necessary catalysts for sustained economic growth and development.
A lot of literature exists on tax revenue and economic growth of nigeria adereti et al. The impact of taxation on investment and economic development. This paper investigates the impact of taxation on economic growth in south africa. Evaluating the impact of value added tax on the economic. A clear presumption exists that data on economic activity must reveal a strong correlation between taxation and growth. 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.
Some researchers estimated the effect of tax revenue on the economic development of nigeria using gross domestic product gdp. Impact of etaxation on nigerias revenue and economic growth. The effect of tax revenue on economic growth and development. The empirical results confirm that there is a negative relationship between taxes and economic growth in south africa. 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. The impact of tax policy on economic growth in nigeria. The impact of taxation as an aid to economic development includes abstract and chapter one, complete project material available the impact of taxation as an aid to economic development in edo statea case study of oredo local government area, edo state, nigeria proposalthe research work will discuss in detail the impact of taxation as an aid to economic development in edo state. Journal of accounting and taxation full length research paper evaluating the impact of value added tax on the economic growth of nigeria nasiru mukhtar gatawa1, haruna mohammed aliero1 and abdullahi muhammad aishatu2 1department of economics, usmanu danfodiyo university, sokoto, nigeria. Few, ifany have examined this line of research in nigeria. As africas most populous country, nigeria boasts of the continents second largest oil reserves and has a very promising growth outlook. The study involves comparative analysis of the impact of fiscal policy on economic growth in nigeria during regulation and deregulation periods. The aim of this paper is to evaluate the impact of individual types of taxes on the economic growth by utilizing regression analysis on the oecd countries for the period of 20002011.
The variables included in the study are petroleum profit tax, company income tax and custom and excise duty and gross domestic product. Ofurum et al impact of etaxation on nigerias revenue and economic growth. Tax compliance here is proxied in willingness of the citizens to pay tax. The study examines the effect of value added tax and customs and excise duties on nigeria economic growth.
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