Impact of etaxation on nigerias revenue and economic growth. Breakdown of tax legislation in nigeria nigeria 2016. It is the view of many people that the loss of revenue caused by widespread tax evasion and tax avoidance in nigeria is. The impact of taxation on revenue generation in nigeria. However, the results emanating from these studies have been inconclusive. Impact of tax administration on government revenue in a. The study is aimed at the appraisal of revenue generation in nigeria. Tax compliance here is proxied in willingness of the citizens to pay tax. Specifically, we seek to examine the role of petroleum profit tax in stimulating economic growth in nigeria. Relevance of tax revenue resources to infrastructural. At this stage, however, there is little agreement about federal reserve board, washington. Value added tax and economic growth in nigeria john chika. Oct 23, 2014 this research work studied the impact of value added tax on revenue generation in nigeria. Value added tax and economic development in nigeria.
Economic development implies improvements in a variety of indicators such as. Aug 09, 2016 taxation in nigeria and history of taxation in nigeria a tax in nigeria is a compulsory levy imposed by the federal government of nigeria on individuals and corporate entities in respective of return of service expected from the government. Internally generated revenue igr and infrastructural. The study period spans economic cycles for about 66 percent of the life of. In conclusion,after a proper explanation of the various taxes paid in nigeria,what the levels of government can ask for,what the taxes collected by government is used for. Given that the purpose of introducing electronic tax system is to improve revenue collection which will in turn improve the countrys economic growth, the.
Pdf tax revenue and economic development in nigeria. The objective of this study was to examine the significant difference between the effects of oil and non oil tax revenue on economic growth in nigeria. Evaluate the effect of tax revenue on infant mortality im in nigeria. However, allowing theimpact of vat to vary with country specifics will shift the effect to become negative though acting in the opposite direction are gains that. Ahuru department of economics and statisticsfaculty of social sciences, university of benin, benin city abstract the main objective of this paper is to ascertain the impact of tax reforms on tax revenue generation in nigeria. Taxation and economic growth in a resourcerich country. Apart from the revenue function it performs for the government, it is also used to assist the national government to achieve the countrys macro economic objectives in the. Federal government, tax revenue, nigeria, revenue collection, firs. Introduction taxation is a main source of revenue to governments across the world. Azubike1 michael okpara university of agriculture umudike umuahia abia state nigeria. It is on this background that this study tends to examine factors that. A mutual correlation exists between infrastructural development and economic growth in nigeria. Ho1 tax revenue has no significant positive impact on economic development of nigeria using hdi.
The nigerian perspective is because the bulk of revenue needed for development purposes is derived from oil. The study focuses on the impact of petroleum profit tax, company income tax, personal income tax, value added tax revenue on nigeria s economic growth between 1980 and 20. This economic reasoning emphasized the revenue need of government and indicates that, apart from. A study of federal capital territory and selected states 23 research centre for management and social studies selected states in nigeria and to identify the use of taxation to promote economic growth and development in fct and in some selected states in nigeria. The impact of value added tax on revenue generation in nigeria.
For this reason, the entire ownership and control of petroleum wherever it is found in nigeria is vested in the federal government. Impact of etaxation on nigerias revenue and economic. Pdf government tax revenue and economic development in. The objective of the study is to examine the effect of tax revenue on economic growth of nigeria and ghana. The second objective further ascertained the difference, if any, with the result obtained using hdi and gdp in estimating the effect of tax revenue on the economic development of nigeria.
Some researchers estimated the effect of tax revenue on the economic development of nigeria using gross domestic product gdp. The study adopts the ordinary least square ols regression technique and established that tax revenue has positive effect on economic growth in nigeria. An overview of the nigerian economic growth and development. Challenges to economic growth in nigeria michael amati. In 83% of the surveyed countries, effect on tax revenue in nigeria. Time series data on the gross domestic product gdp, vat revenue, total tax revenue and total federal government revenue from 1994 to 2010 sourced from.
This study examines the effect of tax revenue on economic growth in nigeria, utilizing time series data for the period spanning from 1970 to 2011. Taxation, besides its revenue generation capacity, can also be used as a fiscal policy tool to shape the economy. The effect of tax revenue on economic growth and development in nigeria abstract the contribution of. From the point of view of economic theory, marginal tax rates are particularly important because they. Taxation and tax policy as government strategy tools for economic development in nigeria oyewo babajide michael 1 1 school of business, department of accounting, covenant university, ogun state, nigeria abstract. Ofurum et al impact of etaxation on nigeria s revenue and economic growth. With 356,759 square miles, it is one of the largest african nations. Tax revenue and economic development in nigeria international. Infrastructure development and economic growth nexus in nigeria. World bank and pwc 2015 3 paying taxes survey in 2005 revealed that taxpayers are able to file tax returns electronically in.
There have been several studies that have investigated the relationship that exist between infrastructure development and economic growth. The general objective of this study is to examine the impacts of value added tax on revenue generation in nigeria. Previous studies on the nigeria economy in the last decade show that the petroleum industry has been playing a dominant role and occupies a strategic position in the economic development of nigeria azaiki and shagari 2007. However, one means of generating the amount of revenue for providing the needed. With the recent global economic recession and diminished oil prices, the government is facing the need to continuously raise revenue. Over the years, revenue derived from taxes has been very low and no physical development actually took place, hence the impact on the poor is not being felt. Petroleum revenue and economic development of nigeria 1980 20. To establish the effects of value added tax on revenue generation in nigeria. The study examines the effect of the businesses in nigeria on the economic development of the country. An emperical analysis of tax revenue and economic growth in.
The effect of tax compliance on economic growth and. A is so much in terms of quantification and cannot be therefore penalize any company that have registered but evades tax. The objective of this study is to investigate the impact of taxation on economic development of nigeria proxy by the gross domestic product gdp. In these studies, researchers used economic development and economic growth interchangeably.
The effects of tax revenue on economic growth in nigeria. Value added tax and economic growth michael and ben 2007 explore the causes and consequences of the spread of value added tax vat. The study applied the concepts of elasticity and buoyancy to examine the relationship between tax revenue and economic growth in kenya for the period 2002 to 2012. Tax revenue generation and the economic development of. This study examined the impact of etaxation on nigeria s revenue and economic growth. To examine the relationship between value added tax and revenue generation in nigeria to establish the effects of value added tax on revenue generation in nigeria 1. The impact of tax accounting on economic development of nigeria. Internally generated revenue igr and infrastructural development in akwa ibom state. Many of them have covered all its ramifications while some have effectively appraised the problem of tax.
In order to justify this dichotomy, an attempt is made in this paper, taking nigerian economy as a case study, to address the economic effects of both low and high tax policy regimes on economic growth with the main objective of examining the economic impact of tax policies on growth and development. Apart from the revenue function it performs for the government, it is also used to assist the national government to achieve the countrys macroeconomic objectives in the. Similar finding which indicate that low income tax rates boosted the economic growth was reported by bonu and pedro 2009 who utilized descriptive technique in botswana. Value added tax and economic development in nigeria madugba, joseph ugochukwu1 joseph,u. The impact of tax revenue on nigerian economy case of federal board of inland revenue matthew a. The productivity of a tax system in yielding sufficient revenue to meet government. Data were obtained from the central bank of nigeria, office of the. The roles of value added tax in the economic growth of nigeria. Hence, the problem of poor internal generated revenue in most local government in nigeria. Pdf this study is on government tax revenue and economic development in nigeria.
It is not farfetched that taxation has a positive role, and is an engine to the economic growth of nigeria. Umoh introduction this article overviews the growth and development of the nigerian economy from inde pendence to present times. The contribution of taxation to any economy globally cannot be overemphasized. While competitive enough to bolster the countrys appeal to foreign investors and skilled expats, nigeria s tax system is also tasked with the responsibility of providing the government with enough resources to finance the countrys development company tax and petroleum royalties in fact account for the primary source of government revenue. Development of any tax policy on tax revenue for economic development should better be. It is a tax that one must pay at one time or another regardless of whether the person is an individual, corporation, employee, employer or selfemployed, and this is a significant reform in nigeria s tax system. Vat has a directorate within the frame work of the federal inland revenue services firs with the head office in abuja. An emperical analysis of tax revenue and economic growth in nigeria from 1980 to 2015. The effect of tax evasion and avoidance on nigerias. The study focuses on the impact of petroleum profit tax, company income tax, personal income tax, value added tax revenue on nigerias economic growth between 1980 and 20. A lot of literature exists on tax revenue and economic growth of nigeria adereti et al. Pdf effect of tax revenue on economic development of nigeria.
Relevance of tax revenue resources to infrastructural development of nigeria international journal of managerial studies and research ijmsr page 75 development in nigeria. I hope the readership have been properly educated on the role of taxation in the nigerian economy. Revenue generation in nigeria has been one of the topical issues in recent times especially with the drastically. The study focused on the impact of tax revenue on nigeria economy. A simple hypothesis was formulated in the null form which states that there is no significant relationship between tax revenue and ghanas gdp. The introduction of vat in nigeria through decree 102 of 1993 marks the phasing out for the sales tax decree no. Thus the main objective of this study is to explore the relationship between tax revenue and economic growth and development in nigeria. The effect of tax revenue on the economic development of nigeria is not significantly different from its impact on economic growth using gdp as a measure. This study examines the effect of tax revenue on economic growth in ghana using quarterly data for the period 1986 to 2010 within the var framework. Today, nigeria is indeed in dire need of effective and efficient tax system in order to generate enough revenue that will stimulate economic growth and development oji, 2000.
Its impact on government developmental effort a study of selected local council in kogi east senatorial district edogbanya, adejoh. This is because tax revenue is an important instrument for economic growth and development in many developing economies like nigeria, since the internal revenue generated. Abstract local government is faced with varieties of difficulties to source adequate revenue from federal government, state government and internally generated. The main aim of this research is to analyse the relationship between total tax revenue and economic growth in nigeria. This work evaluates the effect of tax avoidance and tax evasion on economic growth and development in nigeria 20062016. Effects of income tax changes on economic growth brookings. Nigeria is richly blessed with oil and gas among other mineral resources, but the over dependence on oil revenue for the economic development of the country has left much to be deserved. The objective of this study is to ascertain the relationship between tax revenue and economic development in nigeria during the period 1994 2016. Tax revenue is made up of direct taxes, indirect taxes and taxes collected by the customs division. Effort shall therefore be made in this research to see how much nigeria have been able to achieve her economic goals with her tax policies and administration. The effect of tax revenue on economic growth and development in nigeria. Many of them have covered all its ramifications while some have effectively appraised the problem of tax administration in. Department of accounting and finance faculty of management sciences, lagos state university, lagos, nigeria eaddress. The researcher, therefore, conclude that tax revenue can be an instrument of economic development in nigeria.
Pdf abstract the objectives of this study was to examine the effect of tax revenue on the economic development of nigerian, and to ascertain whether. Taxation in nigeria plus history of taxation in nigeria. Crude oil export has continued to account for over 80% of the total federal government revenue, while the remaining 20% is contributed by nonoil. The objective of this study was to analyze the relationship between tax revenue and economic growth in kenya for the period 2002 to 2012. According to ariyo 1997 nigeria s over dependence on oil revenue to the total neglect of other revenue source was encouraged by the oil boom of 197374. On the other side, to meet their revenue generation targets, the government especially at the state level opts for aggressive taxation of the informal sector. The study found that there exist both short run and long run relationship between economic growth and tax revenue.
The state of play as shown in figure 1, africa has made some progress in raising nonresource tax revenues over the past two decades. May 02, 2015 the study examined the effect of tax compliance on economic growth and development in nigeria. The effects of tax revenue on economic growth in nigeria1970. Its population of around forty million makes nigeria the largest african unit. This study was designed to investigate the tax revenue and nigerian economic growth for period of three decade, using time series data from 1986 to 2015. The study examined the effect of tax compliance on economic growth and development in nigeria. Impact of value added tax vat on government revenue and economic growth in nigeria 94 revenue to gdp ratio of about 4. The impact of taxation as an aid to economic development includes abstract and chapter one, complete project material available the impact of taxation as an aid to economic development in edo state a case study of oredo local government area, edo state, nigeria proposal the research work will discuss in detail the impact of taxation as an aid to economic development. The implementation of etaxation has significant tax compliance process electronically. Tax revenue mobilization as a source for financing development activities in nigeria has been a difficult issue primarily because of various forms of resistance, such as evasion, avoidance and other form of corrupt practices. The impact of tax reform on federal revenue generation in nigeria dickson. The impact of tax policy on economic growth in nigeria. It aimed to give a detailed examination of the effect of tax avoidance on the economic growth and development in nigeria. Amaefule department of accountancy, imo state university, owerri, imo, nigeria abstract this study examined the impact of etaxation on nigerias revenue and economic growth.
In a country like nigeria, where among scores of natural resources only one crude oil accounts for over 90 percent of its total export trade, there is no other route to achieving a national sustainable economic growth other than to find the appropriate ways to diversify the export base. The paper empirically examined the contribution of vat to the development of the nigerian economy. In nigeria, nobody can dispute the fact that though this taxes are been collected, they are. The impact of tax accounting on economic development of. This paper attempts to examine the relationship between value added tax and economic development. Some others also argue that the level of economic development have justified the quantum of taxes collected in nigeria. Identify the effect of tax revenue on labour force lf in nigeria. Economic development in nigeria 393 the country is big and diversified, and the present federal constitution reflects the history as well as the diversification of the country. Secondary data were used in this study, the data were collected from cbn statistical bulletin also gathered from journals and textbook that is related to the research topic, the study. The study adopted a descriptive and historical research design. The result indicated a unidirectional causality between tax revenue and economic growth and it flows from tax revenue to economic. Petroleum profit tax revenue from petroleum profit tax is the most significant source of revenue of the nigeria government, accounting for over 90% of its total foreign exchange earnings. This has been on the increase but more is need to reduce the deficit of ghana. This study used single linear regression models to test the impact of petroleum revenue on economic development of nigeria, between 1980 and 20.
Nigeria also says it is intensifying measures to collect tax from new revenue streams, such as online transactions. There is no doubt that taxation must have affected the economic development of nigeria. A lot of literature exists on tax revenue and economic growth of nigeria. Pdf the dwindling price of crude oil has lowered the revenue generation to government thereby, impacting negatively on the nigeria economic growth. Taxation and tax policy as government strategy tools for. Organisation for economic cooperation and development oecd and. World bank national accounts and oecd national accounts files. In trying to judge to what degree the tax system may. Individuals are subject to tax under the personal income tax act as amended.
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