TAX REVENUE AND ECONOMIC DEVELOPMENT IN NIGERIA

Abstract

The main objective of this study is to ascertain the effect of Tax Revenue on Economic Development with a focus on Nigeria. The specific objectives were to determine; the effect of Companies’ Income Tax on Human Development Index, Petroleum Profit Tax on Human Development Income and Custom and Excise Duties on Human Development Income in Nigeria  from 1995-2022. This study employed the use of time series data and Ex-post facto research design. Secondary data were sourced from Central Bank of Nigeria (CBN), Statistical Bulletin, Federal Inland Revenue Service (FIRS), World Bank Statistical Bulletin and Annual Abstract of Statistics from the National Bureau of Statistics (NBS). Inferential statistics of the hypotheses were carried out with the aid of E-views 10 statistical software using Augmented Dickey Fuller (ADF) test, Pearson Co-efficient of Correlation and Ordinary Least Square (OLS) regression analysis. The study found that companies’ income tax has a significant but negative effect on human development index (β1= -0.083476; p-value = 0.0242<0.05); Petroleum profit tax has a significant and positive effect on human development index (β2= 0.502645; p-value = 0.0026<0.05); Custom and excise duties have a significant but negative effect on human development index (β3= -0.706739; p-value = 0.0006<0.05) in Nigeria at 5% level of significance. It was recommended inter alia that federal government of Nigeria should underpin public financial management reforms, strengthen supervisory and transparency practices, improve tax administration, and fight tax evasion.