ABSTRACT
In this study, we have empirically investigated the relationship between taxation and economic development in Nigeria for a period of 27 years (1994 to 2020). The rationale for the present study is predicated on the fact that taxation (tax revenue) plays significant role in the economic development in any country across the globe. Also, it contributes a large chunk of fund to the government for financing their recurrent and capital expenditure.
Thus, using the ordinary least square (OLS) econometric technique on variables such as GDP per capital (GDPC), petroleum profit tax (PPT), corporate income tax (CIT) and value added tax (VAT); the empirical results generally indicate that taxation have a significant impact on economic development in Nigeria within the period of investigation. Specifically, it was tax variables such as (petroleum profit tax and value added tax) that exert significant impact on the economic development of Nigeria overtime.
Based on these findings, we recommended that: the government should strengthen tax administration to ensure more efficient tax collection, through training of staff, awareness campaigns and computerization of customs tariff; the tax base should be broaden and VAT administration brought closer to the taxpayer by establishing new local VAT offices; government on its part should use VAT proceeds to improve on the standard of living of the populace and improve on infrastructures such as transport, power, communication and information technology so as to strengthen the productive capacity and motivate taxpayers in paying their taxes; prosecution of corrupt tax officials and tax payers that default on tax payment should be intensified; and government should be made to cut down unnecessary expenditure rather than increase tax rate
Keywords: Taxation, Economic development, Gross domestic product, Petroleum profit tax, Companies income tax, Value added tax.
