TAX REVENUE AND ECONOMIC GROWTH IN A DEVELOPING ECONOMY: EVIDENCE FROM NIGERIA

KWODE, Ejomafuvwe Israel
Department of Accounting, Administration and Economics
Admiralty University of Nigeria
ikwode@yahoo.com
DANIA, Evelyn
Department of Accounting, Administration and Economics
Admiralty University of Nigeria
daniaevelyn@yahoo.com
ABSTRACT
This study examined tax revenue as a catalyst for economic growth, with emphasis on Nigeria’s economy
from 1990- 2019. Primarily, the study examined the contribution of various components of tax revenue,
including petroleum profit tax (PPT), company income tax (CIT), customs excise duties (CED) and valueadded tax (VAT) on economic growth, using multiple regression model. Data were sourced from Central
Bank of Nigeria statistical bulletin and Federal Inland Revenue Service, while Ordinary least square
regression model was used to determine the effect of tax revenue (proxied by PPT, CIT, CED and VAT) on
economic growth (represented by GDP). The study found that there is a significant effect of tax revenue on
Nigeria’s economic growth. Specifically, CED and VAT exert negative effects on Nigeria’s economic
growth; while CIT and PPT had positive effects on economic growth in Nigeria. Based on the findings, the
study recommends among others that tax revenue base should be expanded by bringing more individuals
and corporate bodies into tax net. Finally, corruption in the Nigerian tax administration should be brought
to the barest minimal to ensure that adequate tax funds are remitted from all sectors of the Nigerian
economy.
Keywords: Diversifications, economic growth, tax revenue, tax system