TAX REVENUE AND ECONOMIC GROWTH IN NIGERIA

Abstract

This study empirically investigated the contribution of tax revenue to the economic growth in Nigeria. Given that the Federal Government of Nigeria replaced the Sales Tax with the Value Added Tax (VAT) in 1993, this was done. The objective was to raise the government's tax base and make money accessible for long-term economic development initiatives. Time series data on VAT, economic growth, company income tax, petroleum profit tax, custom and excise duties from 1994 to 2022, were sourced from Federal Inland Revenue Service (FIRS) and Organization of Economic Development Organization (OECD) were analyzed, using both descriptive statistical and error correction model methodology. Findings showed that VAT Revenue has significant positive effect on economic growth both in the long and short run. Similarly, company income tax, petroleum profit tax, custom and excise duties have significant impact on economic growth during the studied period. On the basis of our findings, the study concludes that Nigeria has begun to harvest a major advantage of tax revenue both in the short and long runs because of its long-term impact on economic growth.