IMPACT OF TAXATION ON ECONOMIC GROWTH IN NIGERIA (1981 – 2022)

Abstract

This study examined the impact of taxation on economic growth in Nigeria between the period 1981 and 2022 using an econometric methodology and a vector error correction estimation technique. The study sought to achieve the following objectives; to estimate the extent to which companies’ income tax revenue impact on economic growth in Nigeria; to determine whether there is significant impact of petroleum profit tax revenue on economic growth in Nigeria; and to determine whether there is significant impact of customs and excise duty revenue on economic growth in Nigeria. The empirical analysis made use of time series data on real gross domestic product, company income tax revenue, Petroleum profit tax revenue and Custom and excise duty revenue all of which are sourced mainly from CBN publications. Vector error correction was used to estimate the parameters of economic relationship existing among the specified model and the result shows that company income tax revenue, Petroleum profit tax revenue and customs and excise duties revenue all exert positive and statistically significant impact on real gross domestic product in Nigeria. Based on the finding above, the study recommended among other things that government should ensure the tax revenue generated are channeled toward building capital stock that can create more jobs which will generate more revenue to government through other forms of tax.