Progressive Taxation And Income Inequality In Nigeria

ABSTRACT

This study examined the effects of progressive taxation on income inequality in Nigeria spanning periods from 2011 to 2023 based on the accessibility of data. The study adopted the Ex-Post-facto and longitudinal research design. The independent variable of the study taxation was proxied by Company Income Tax (CIT), petroleum profit tax (PPT), Personal Income Tax (PIT), Capital Gains Tax (CGT), while the Gini coefficient (GINI) served as the dependent variable. As a result, four hypotheses were raised .This research proposed the examination of government expenditure on infrastructure as a novel metric for assessing redistribution, addressing the limitations of prior studies thatpredominantly relied on the Gini coefficient as a proxy for income redistribution.The results revealed that there is a significant relationship between capital gains tax (CGT), company income tax (CIT) and income inequality in Nigeria, as both taxes respectively Influences income inequality positively and negatively ; while there was insufficient evidence to conclude that personal income tax (PIT) and petroleum profit tax (PPT) significantly affects income inequality in Nigeria .Based on these findings, it was recommended among others that there should be optimisation of personal income tax (PIT) frameworks to enhance progressivist and ensure that higher income earners contribute proportionally to tax revenues.