Tax Reforms, Digitalization and Government Revenue in Nigeria

International Journal of Academic Research in Accounting, Finance and Management Sciences, 2018

The objective of this study is to ascertain the relationship between tax revenue and economic development in Nigeria during the period 1994-2016. Data were obtained from the Central Bank of Nigeria, Office of the Federal Inland Revenue Service and Annual Abstract of statistics of the National Bureau of Statistics. This study was based on time series data. The Augmented Dickey Fuller test, Multple linear regression, Multicollinearity test, Granger Causality test, Johansen cointegration test and Error correction model were employed in the analysis of the data. The findings of this study showed that tax revenue has a statistically significant relationship with infant mortality, labour force and gross fixed capital formation in Nigeria at 5% level of significance respectively. On the basis of the findings, it was recommended among others that since tax revenue has been proven to contribute to economic development in Nigeria, Government needs to increase its allocation to the priority sectors of the economy such as agriculture and industry in order improve on the welfare of the citizenry.

Advances in Social Sciences Research Journal

This study investigated the impact of taxation on economic development of Nigeria from 2003 to 2017.Vector Error Correction Model (VECM), Augmented Dickey-Fuller (ADF) unit root test, Autoregressive Distributed Lag (ARDL) bounds test, Jarque-Bera Normality Test and Eigenvalue stability condition were utilised in this study. The study revealed that companies’ income tax, petroleum profit and value added tax have a long run impact of -0.225(p-value=0.000),-0.0005 (p-value=0.699), and 0.211(p-value=0.000) respectively on the economic development of Nigeria.It was concluded that taxation has a significant long run relationship with Nigeria’s economic development. The study recommended that the government should not increase companies’ income tax rate because it is detrimental to the economic development of the country in the long run, instead the government should increase the value added tax because it has the potentiality to improve economic development of Nigeria. Also, the governmen...

The main thrust of this research was to explore the revenue and expenditure nexus on Nigeria from 1981 to 2016. It tried to uncover the expenditure hypothesis that Nigeria's government had adopted in her budgeting. Time series data obtained from the statistical bulletin of the Central Bank of Nigeria (CBN) was used for the study, and it was subjected to unit-root tests. The results from Augmented Dickey Fuller (ADF) and Philip-Perron tests indicated that the variables only became stationary after differencing once. Accordingly, Johansen cointegration test was conducted and results revealed a longrun relationship between the variables. An Error Correction Model (ECM) was carried out to tie the shortrun dynamics with longrun equilibrium. The ECM exhibited the right sign and significant in both models. The results equally provided empirical evidence that government expenditure has significant effect on revenue in Nigeria as there was a negative and significant relationship between them at various lags when expenditure was made the dependent variable. A positive and significant relationship existed between the variables at various lags when revenue was made the dependent variable. The results of Granger causality tests showed that unidirectional causality runs from expenditure to revenue in Nigeria and this confirmed the adoption of Spend-Tax Hypothesis in Nigeria. Based on these findings, it was recommended that the government should lay more emphases on revenue than expenditure to remove/reduce budget deficits; should explore other viable avenues other than oil to increase its revenue; emphases should be placed on capital expenditure than on recurrent expenditure as this will help in reducing the over bearing expenditure profile of the country and removal of fiscal imbalances.

Econometric models of tax reforms, 2022

The paper aims to explore how the introduction of an electronic tax system impacts on economic growth in Nigeria. The neoclassical growth theory and Technology Acceptance Model (TAM) was used in the study. Based on diagnostic tests, Autoregressive Distributed Lag bounds test regression model was adequately created. The quarterly secondary data of Central Bank of Nigeria and tax statistics data were divided into two periods for analysis: from 2011q 1 to 2015q 3 pre-electronic tax period (pre-e-tax) and from 2015q 4 to 2020q 4 post-electronic tax period (post-e-tax). In pre-e-tax in the long-run, education trust fund revenue strongly enhances economic growth, company income tax and stamp duty are moderate revenue earners for economic growth, while petroleum profit tax revenue have moderate negative impact on economic growth. Value added tax and capital gain tax revenues insignificantly decreases in economic growth in the same period. In post-e-tax in the long run, value added tax, petroleum profit tax, and capital gin tax insignificantly decreases economic growth, while company income tax, education trust fund, and stamp duty insignificantly enhance it. For pre-e-tax revenue in the short-run, education trust fund strongly decreases economic growth, value added tax and petroleum profit tax had insignificant positive influence, while company income tax, capital gain tax, and stamp duty had no impact. For post-e-tax revenue in the short-run company income tax had no influence, value added tax had moderate negative impact, petroleum profit tax had a strong positive impact, education trust fund, capital gain tax, and stamp duty had strong negative impact on economic growth. To optimize the relationship between tax structure and economic growth, tax evasion, corruption, and tax avoidance should be checked.

IntechOpen eBooks, 2023

Taxation plays a pivotal role in the fiscal management and financing of the public sector by the government. This study is dedicated to a comprehensive exploration of taxation and its implications for fiscal sustainability, particularly in the context of a resource-rich developing nation, with a specific focus on Nigeria. In our investigation, we harnessed the power of the Autoregressive Distributed Lag (ARDL) model alongside other robust econometric tools such as the Augmented Dickey-Fuller unit root test and the ARDL bounds test of cointegration. The empirical findings of this study underscore the substantial influence of taxation on Nigeria's economic growth over the entire period under consideration. While petroleum profit tax exhibited a dampening effect on economic growth, companies' income tax and value-added tax contributed positively. Significantly, the impact of value-added tax on overall productivity eclipsed that of companies' income tax. The recommendations emphasize strengthening tax collection institutions for better compliance. The government should also focus on establishing an efficient tax system that widens the tax base, which can be achieved by formalizing informal businesses. This approach is crucial for increasing tax revenues, enhancing fiscal sustainability, and restructuring Nigeria's economy.

Asian Journal of Economics, Business and Accounting

The study examined the effect of tax revenue on socio-economic performance in Nigeria between 1981 and 2020, the primary purpose of this study was to examine the effect of tax revenues on the socio-economic performance of Nigeria. The expo-factor research design was adopted for this study and the analysis was carried out using descriptive and broad econometric techniques. The analysis started with exploring the trends in each variable using line graphs after which descriptive statistics were used. Both the Autoregressive Distributive Lag (ARDL) and Dynamic Error-Correction Model (ECM) econometric models were estimated. Other relevant pre-estimation diagnostic tests (normality, serial correction, heteroscedasticity and unit roots) were satisfactory. Succinctly, the study found that tax revenue from Customs and Excise Duties (CED) showed a positive and significant influence on basic school enrolment and life sustenance. Also, current period company income tax revealed a negative influ...

Objective-The paper is aimed at examining the relationship between government tax revenue , non-tax revenue and government expenditure in Nigeria. Design/methodology-Quantitative research design was employed. Secondary data were collected from Central Bank of Nigeria statistical bulletin, World Bank, World Data Atlas and Federal Inland Revenue Service. The study covers the period of 2010 to 2018. Meanwhile descriptive statistics was used to analyzed the data. Results-The findings of the study discovered that, there is a relationship between government revenue and government expenditure, and the Nigerian government revenue and expenditure is in line with the spend-and-revenue hypothesis. That is government revenue only respond to previous changes in expenditure. Thus, government is expected to generate enough tax revenue to enable it meet government expenses as revenue from oil is decreasing. This signifies that whenever there is high government expenditure, it is required that government must raise higher revenue, and in Nigeria, government expenditure is always higher than the revenue resulting to budget deficit. In addition, tax revenue was found to have been increasing even though at a slower rate. Limitation/Suggestion-The study recommends that Nigerian government should cut down current expenditures on wages, acquisition of goods and services that are unnecessary and increase capital expenditure. Increase in capital expenditures on education, infrastruc-tures and health care will boast the economic activity and which will in turn increases government tax revenue.

TURK FINANCE AND ECONOMICS RESEARCH, 2022

The study examined the impact of tax revenue on national budget performance. The study employed the time-series data of thirty-four (34) years between the period of 1985-2018. The theories that anchors the work include; Socio-political theory, Expectancy theory, Benefit Received theory and Ability-to-pay theory. Secondary data was used for this study. The Ordinary least square was employed for the analysis, but the unit root test which is a pre-estimation technique subjected the study to employ the Auto-regressive Distributed Lag (ARDL). Objective one revealed that CIT (Consumer income tax) has negative significant effect on CAPEX (Government capital expenditure) at (β=-2.24, P<0.05) and VAT (Value added tax) has positive significant effect on CAPEX (Government capital expenditure at (β=6.05, P<0.05). It is recommended that direct and indirect tax in any country should be given priority because they are consequential sources of revenue for the government.

2017

The study revisits the revenue-expenditure nexus in Nigeria using the asymmetric cointegration methods to study four hypotheses related to the revenue and ­expenditure­ nexus,­ namely:­ tax-spend,­ spend-tax,­ fiscal­ synchronisation­ and­ institutional separation hypotheses for state and FCT government in Nigeria, between 1981 and 2014, using the Asymmetric Cointegration Technique. Results show­the­following;­first,­the­Engle–Granger,­Gregory­and­Hansen­(1996)­and­the­ Hatemi-J­(2008)­cointegration­tests­along­with­the­cointegration­tests­associated­ with the TAR and MTAR models indicate there is a long-run equilibrium relationship between aggregate state and FCT government revenue and expenditures. Second, the M-TAR model provides evidence of asymmetries in the adjustment process towards budgetary equilibrium. Third, state and FCT government revenue has­a­statistically­significant­impact­on­state­and­local­government­expenditure­ in the short run, thus supporting the tax-spend hyp...

Management Studies and Economic Systems, 2015

The study investigates the impact of taxation on the Nigerian economy for the period 1994-2012. The dependent variables used in the model includes: Gross Domestic Product (GDP) as a parameter for measuring economic growth, inflation and unemployment. The objective is this study is to determine how taxation affects these macroeconomic variables. To avoid spurious results, the data set collected from the Central Bank of Nigeria statistical bulletin and Federal Inland Revenue Services was subjected to Augmented Dickey Fuller Unit Root test, which reveals that the variables are stationary. The cointegration test also reveals that the variables are cointegrated and long run relationships exist between the variables. The results of the statistical analysis reveal that positive relationships exist between the explanatory variables (Custom and Excise Duties, Company Income Tax, Personal Income Tax, Petroleum profit tax and Value Added Tax) and the dependent Variables (Gross Domestic Product, Unemployment). But, the individual explanatory variables have not significantly contributed to the growth of the economy; also the explanatory variables have not significantly contributed to the reduction of the high rate unemployment and inflation in Nigeria for the period under review. Study recommends total restructuring of the tax system in the country and the provision of basic amenities (good roads, steady power supply, internal security, etc) which will encourage individuals and corporate organizations to honor their tax obligations in Nigeria.

This study assessed the impact of tax reforms on revenue generation in Lagos State of Nigeria using Time Series quarterly data between the period of 1999 and 2012, obtained from the records of Tax Payer Statistics and the Revenue Status Report of Lagos State Internal Revenue Service (LIRS). Data collected were analysed using ordinary least square regression techniques (OLS). The study showed that Lagos State captured more people into the tax net as there was a continuous increase in taxpayers' cumulative growth (more than 20% each year); and found that the primary source of revenue generation in Lagos State was the internally generated revenue (IGR) in which tax revenue constituted about 80%. The result also showed that, on trend, between 1999 and 2005, there was no noticeable increase in revenue generated from tax; but from 2006, there was a sharp, steady and noticeable increase in the tax revenue generated. On the pattern of tax administration in the state, from 2006 the state concentrated more on tax reforms with less dependence on other sources of internal revenue generation. The result further revealed that there was a long run relationship between the tax reforms and revenue generated in Lagos State; thus, the tax reforms had positive and significant effect on the revenue structure of the State. The study concluded that tax reforms had significantly contributed to revenue generation in Lagos State, which had enabled the state to carry her responsibilities to the citizenry with less reliance on the Federal Government.

European Journal of Economic and Financial Research

This paper examined the relationship between tax revenue and economic growth in Nigeria over 1981–2019 period, with special focus on Companies Income Tax, Value Added Tax and Petroleum Profits Tax. The data were sourced from the National Bureau of Statistics (NBS) and the Federal Inland Revenue Service (FIRS). The study employed the Vector Error Correction Model (VECM) to establish the nature and strength of the relationship between taxation and economic growth. The Johansen test of cointegration reveals that there is at least one cointegrating equation in the long-run between the variables. Granger causality test found a causal relationship among Real GDP and the different tax components. The impulse response functions and the variance decomposition analysis uphold the findings that the impact of the shock in the indirect tax (VAT) and direct tax (CIT and PPT) on GDP growth does not die out over the specified period under consideration. Variance decomposition analysis found that th...

Asian Journal of Economics, Business and Accounting, 2021

This study examines the relationship between tax revenue and economic growth in Nigeria for the period 1994-2020. We explore the linkages between availability of higher resource revenue and lower taxation effort of other revenue categories and the effects of these on growth. The Ordinary Least Square (OLS) estimation technique was employed in estimating the specified model. Also, descriptive analysis was carried out regarding tax trends and tax efforts in Nigeria to determine the effectiveness of existing tax structures. Furthermore, stationarity test, cointegration and the VECM were adopted forthwith. Empirical results reveal that taxation has a significant effect on economic growth in Nigeria. However, the proportion of tax contribution to the growth rate falls short of the optimal level in terms of the volume of economic activities and value of total output. Nigeria also lags other African countries with respect to tax effort and as such has a huge untapped potential for enhanced...

Asian Journal of Economic Modelling, 2016

Over several decades, taxation has been taken as a veritable medium of engineering the growth or performance of an economy. However, empirical literature is not conclusive, as several studies have indicated mixed effects of tax on economic growth. Arising from this, the study investigated the cointegration relationship between tax revenue and Economic growth in Nigeria from 1980 to 2013. Various preliminary tests including descriptive statistics, trend analysis, and stationary tests using Augmented Dickey Fuller (ADF) test were conducted. The Engle-Granger Cointegration test was employed to determine whether a long run relationship existed between the variables. The Vector Error correction model was employed to confirm the long run relationship and determine the short run dynamics between the variables. Two post estimation diagnostics tests (autocorrelation, and Heteroscedasticity) were also conducted in order to confirm the robustness of the model. Findings indicated that a long run (but no short run) relationship existed between taxation and economic growth in Nigeria. 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. However, the tax components are jointly insignificant in impacting the Nigerian economic growth. This study recommends strong institutional reforms in the Department of Customs in order to plug the manifest leakages. The tax collection mechanism used by tax officials must be free from corruption and embezzlement. If this is not done, the revenue collected many not reach the desired point. The Federal Government, state governments and local governments should urgently modernize and automate all its tax system.

There is a public concern for a return on the formulation and implementation of macroeconomic policies. The study aim at determining effect of fiscal policy on Nigeria economic development. The study adopted secondary data obtained from the CBN 2019 statistical bulletin for the period of 1999-2018. The study used economic views for regression analysis and Granger Causality Test. The alternative hypothesis (Hi) "government's revenue and expenditure policies have significant effects on Nigeria economic development" and "annual budgets of government have significantly contributed to Nigeria economic development" are accepted. The study concluded that fiscal policy components are very significant to economic development. The study recommended that tax revenue generation policies should be addressed to avoid leakages in the economy.