Tax Structure and Economic Growth in Nigeria: Evidence from Vector Autoregressive Model

Authors

  • Ewedairo Hafeez Taiwo Department of Accounting, Faculty of Management Sciences, University of Port Harcourt Choba Port Harcourt
  • Christopher C. Ebere Department of Accounting, Faculty of Management Sciences, University of Port Harcourt Choba Port Harcourt

Keywords:

Tax, Tax Structure, Economic Growth

Abstract

This paper used quarterly time series data to examine the tax structure and economic growth in Nigeria over a period of 2006 to 2021. Data were secondarily sourced from Federal Inland Revenue Service (FIRS) and Central Bank of Nigeria (CBN) bulletins. The tax structure variables on which data were collected are the company income tax, value added tax and petroleum profit tax. Data were also collected on gross domestic product which is a proxy for economic growth. The data generated were analyzed using vector autoregressive model. The study found a bidirectional causality between the GDP and value added Tax. The lags of the company Income Tax cannot significantly cause the GDP. Lags of value added Tax can cause company Income Tax, but lags of company Income Tax cannot cause Value added and petroleum Income Tax. The study therefore recommends that the tax administrative loopholes, including tax evasion and avoidance should be prevented to improve tax revenue and GDP of the Federal Republic of Nigeria.

Downloads

Download data is not yet available.

References

Adegbite, T. A. (2015). The analysis of the effect of corporate income tax (CIT) on revenue profile in Nigeria. American Journal of Economics, Finance and Management, 1(4), 312-319.

Adeyemi A. A. & Mieseigha E. G. (2019). Personal Income Tax (PIT) and Economic Growth in Nigeria: A Vector Autoregression (VAR) Analysis. Trend Economics and Management.

Alexander A.A., Keyi M.D. and Alfa Y. (2019). Taxation and Economic Growth in Nigeria: Evidence from Autoregressive Distributed LAG (ARDL) Model. International Journal of Innovative Finance and Economics Research 7(4), 143-151.

Angahar, P. A. & Alfred, S. A. (2012). Personal Income Tax Administration in Nigeria: Challenges and Prospects for Increased Revenue Generation from Self Employed Persons in the Society. Global Business and Economics Research Journal, 1 (1).

Bassey, O.U (2013). Personal income tax in Nigeria. Lagos: CIBN Press Ltd.

Dickey, D. & Fuller, W. (1979). Distribution of estimation of Autoregressive Time Series with Unit Roots. Journal of American Statistical Association, 74(366), 427 - 431.

Ebimobowei, A. & Ogbonna, G. N. (2012). Petroleum Profit tax and economic growth: cointegration evidence from Nigeria. Asian Journal of Business Management, 4(3), 267-274.

Emmanuel, E. C & Charles, O. (2015) Taxation and the Nigerian Economy: (1994-2012)

Management Studies and Economic Systems (MSES), 2 (2), 111-128

Ibanichuka, E. L., Akani, F. N., & Ikebujo, O. S. (2016). A time series analysis of effect of tax revenue on economic development of Nigeria. International Journal of Innovative Finance and Economics Research, 4(3), 16 - 23.

Illyas, M., & Siddiqi, M. W (2010). The impact of revenue gap on economic growth: A case study of Pakistan. International Journal of Human and Social Sciences, 5-11.

Lyndon, M. E. & Paymaster, F. B. (2016). Tax Revenue and Nigerian Economic Growth. Research Journal of Finance and Accounting, 7(12), 34-51.

Manukaji I.J. (2018). Effect of Tax Structure on Economic Growth in Nigeria. International Journal of Innovative Finance and Economics Research 6(1), 1-11.

Nasiru, M. G., Haruna, M. A., & Abdullahi, M. A. (2016). Evaluating the impact of value added tax on the economic growth of Nigeria. Journal of Accounting and Taxation, 8(6), 59 - 65.

Ogbonna G.N. & Ebimobowei A., (2012). Impact of Tax Reforms and Economic Growth of Nigeria: Time Series Analysis. Current Research Journal of Social Sciences 4(1)62-68.

Ogbonna, G.N & Appah, E (2011). Petroleum Income and Nigerian economy: Empirical Evidence. Arabian Journal of Business & Management Review (OMAN chapter).

Ojong, C. M., Ogar, A, & Arikpo, O. F. (2016). The impact of tax revenue on economic growth: Evidence from Nigeria. Journal of Economics and Finance, 1(1), 32 – 38.

Okoh, J. I., Onyekwelu, U. L., & Iyidiobi, F. C. (2016). Effect of petroleum profit tax on economic growth in Nigeria. International Journal of Business and Management Review, 5(1), 47 - 53.

Okoli, M. N., Njoku, C. O., & Kaka, G. N. (2014). Taxation and economic growth in Nigeria; A Granger causality approach. International Journal of Research in Management, Science & Technology, 2(3), 64 - 80.

Olatunji, T. E & Adegbite, T. A (2014). The effects of petroleum profit tax, interest rate and money Supply on Nigerian economy. Global journal of commerce and management perspectives.

Otu, H. B., & Adejumo, T. O. (2013). The effects of tax revenue on economic growth in Nigeria (1970 – 2011). International Journal of Humanities and Social Science Invention, 2(6), 16,

Oyebanji J.O (2012). Principles and Practice of Taxation in Nigeria. 5th Edition, Frontline Publishers Adesola Ibadan.

Salami, G. O., Apelogun, K. H., Omidiya, O. M., & Ojoye, O. F. (2015). Taxation and Nigerian economic growth process. Research Journal of Finance and Accounting, 6(10), 93 - 101.

Usman, O. & Adegbite T. A. (2015). The impact of petroleum profit tax (ppt) on economic growth in Nigeria: the co - integration analysis, 18th International Academic Conference, London.

PWC (2018). Nigeria’s New National Tax Policy: A new dawn or another false start?

Downloads

Published

2023-01-12

How to Cite

Taiwo, E. H. ., & Ebere, C. C. . (2023). Tax Structure and Economic Growth in Nigeria: Evidence from Vector Autoregressive Model. American Journal of Economics and Business Management, 6(1), 25–42. Retrieved from https://globalresearchnetwork.us/index.php/ajebm/article/view/1883