Impact of Tax Revenues on Economic Growth of Nigeria

Eke Onyekachi Abaa 1 * Ekwe Michael Chidiebere 1 Ihendinihu John Uzoma 1
Department of Accounting,
Michael Okpara University of Agriculture, Umudike
*Email of the corresponding author: ekeabaa@gmail.com

Abstract
This study examined the impact of tax revenues on economic growth of Nigeria. The specific objective
was to evaluate the impact of tax revenues on gross domestic product growth rate of Nigeria. Time
series data from 1970 - 2015 were collected from various issues of Central Bank of Nigeria Statistical
Bulletin, Federal Inland Revenue Services and National Bureau of Statistics. The Data Collected
were on Value Added Tax, Company Income Tax, Petroleum Profit Tax, Custom and Excise Duties,
and Personal Income Tax including Gross Domestic Product. The Augmented Dickey Fuller (ADF),
Auto Regressive Distributed Lag (ARDL) and Vector Error Correction Model (VECM) were used to
test for stationarity of data, and for long and short run equilibrium relationship of the variables
respectively. The result of the study indicated that all the individual tax revenues components were
significant and positively signed meaning that an increase in these variables will result to a
corresponding increase in economic growth of Nigeria. The study therefore recommends that
government should devote a substantial share of these tax revenues towards basic social amenities
such as good road networks, steady power supply, sound health and educational system etc. So as to
foster voluntary tax payment and compliance which will inadvertently boost the economic growth of
Nigeria.
Keywords: Tax revenues, Economic growth, VAT, Company income tax, Petroleum Profit Tax,
Personal Income tax, Custom and Excise Duties, Gross Domestic Product

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