Revenue Implications of Nigeria’S Tax System (original) (raw)

Macroeconomic Determinants of Tax Revenue in Nigeria (1970-2011

The Nigerian government in recent has engaged in search for the appropriate policy strategy to stimulate tax revenue and boost the revenue profile of the government. This paper therefore attempts to examine the most relevant macroeconomic policy variable that can serve as an anchor variable for achieving such policy objective. The paper uses secondary data from Nigeria economy for the period 1970 to 2011 and adopted the error correction mechanism to establish both the long run and short run relationships among the variables. The main finding of the empirical analysis is that tax revenue tends be significantly responsive to changes in income level, exchange rate and inflation rate. The income elasticity of tax shows that a unit percent increase in income level will probably lead tax revenue increase by 0.63% in the immediate and 0.33% in the second year. The evidence is in consonance with findings from previous studies in this area, especially [1, 2]. The paper concludes that macroeconomic instability and level of economic activities are the main drivers of tax buoyancy and tax effort in Nigeria

Tax Revenue and its Effect on selected Macro economic Indicators in Nigeria

Finance management, 2017

Since the discovery of oil in the country, the attention of Nigeria's public revenue has gradually shifted from tax revenue to non-tax revenue. This has several consequences on economic growth and development in the country. This study examines the effects of tax revenue on selected macroeconomic indicators in Nigeria. It employed annual time series data from 1986 to 2015 for personal income tax (PIT), company income tax (CIT), petroleum profit tax (PPT), value added tax (VAT) as independent variables while the dependent variables are employment rate (ER) and price stability (PT). 2 (two) equations were developed to interrogate the relationships between the dependent and independent variables. An autoregressive distributive lag (ARDL) model was adopted to examine the effect of tax revenue on the designated macroeconomic indicators. The results of the analysis for the 2 equations were mixed. With the overall significant effect of tax revenue on price stability, and the mixed (significant/insignificant) effect on employment rate, it is clear that the use of taxes seem to favour price stability rather than employment generation in Nigeria. Though insignificant, the speed of adjustment to equilibrium was very high for price stability while it became very slow for employment level. This study therefore recommends that Government should avoid multiple tax, but rather grant reasonable tax holidays and reduce taxation to encourage new investments and boost employment. A good part of tax should be allocated to upgrade social and economic infrastructures to reduce cost of doing business and improve profits for businesses that could be re-invested in the economy. Finally, government should strive to balance-off the incidences between income tax and service taxes in order to reduce the tax burden on civil/public workers, who have been observed to be the only segment that pay accurate tax to cushion the overall effect on the disposable incomes of these category.

Taxation and the Nigerian Economy ( 1994 - 2012 )

Management Studies and Economic Systems, 2015

The study investigates the impact of taxation on the Nigerian economy for the period 1994-2012. The dependent variables used in the model includes: Gross Domestic Product (GDP) as a parameter for measuring economic growth, inflation and unemployment. The objective is this study is to determine how taxation affects these macroeconomic variables. To avoid spurious results, the data set collected from the Central Bank of Nigeria statistical bulletin and Federal Inland Revenue Services was subjected to Augmented Dickey Fuller Unit Root test, which reveals that the variables are stationary. The cointegration test also reveals that the variables are cointegrated and long run relationships exist between the variables. The results of the statistical analysis reveal that positive relationships exist between the explanatory variables (Custom and Excise Duties, Company Income Tax, Personal Income Tax, Petroleum profit tax and Value Added Tax) and the dependent Variables (Gross Domestic Product, Unemployment). But, the individual explanatory variables have not significantly contributed to the growth of the economy; also the explanatory variables have not significantly contributed to the reduction of the high rate unemployment and inflation in Nigeria for the period under review. Study recommends total restructuring of the tax system in the country and the provision of basic amenities (good roads, steady power supply, internal security, etc) which will encourage individuals and corporate organizations to honor their tax obligations in Nigeria.

Implications of Economic Recession for Value Added Tax revenue: A Case of Nigeria - B. Olusegun Ebo

Continental J. Sustainable Development, 2018

Value Added Tax (VAT), a consumption tax was introduced in order to support other source of government revenue in balancing the budget. This study conducts a critical evaluation of the implications of VAT revenue on the economy proxied by Gross Domestic Product (GDP). To achieve this objective data was obtained from repository of the Central Bank of Nigeria (CBN), National Bureau of Statistics (NBS), Federal Inland Revenue Service (FIRS) and other relevant agencies. Statistical trend analysis and bivariate correlation of VAT revenue with GDP was carried out using the Statistical Package for Social Sciences (SPSS) to evaluate the data. VAT revenue was highly positively correlated with GDP but not with Total Federally Collected (TFC) revenue due perhaps to its minuteness relative to TFC. With the level of GDP, indicative of consumption level, greater amount of VAT should be generated, but bedeviled by laxity in tax administration, corruption on the part of tax officers and taxpayers. It is imperative for the government to overhaul the VAT law, retrain tax officers, reevaluate database of tax agent and reactivate and improve tax enforcement mechanism.

Tax Revenue Effects on Government Revenue Generation in Nigeria

GUSAU JOURNAL OF ECONOMICS AND DEVELOPMENT STUDIES

The study focussed on how Nigeria's value-added tax affected the country's ability to generate income spanning twenty years (1999-2019). The journal of the Chartered Institute of Taxation of Nigeria, Federal Inland Revenue Service Annual Reports, and the Central Bank of Nigeria Statistical Bulletin were sought out as secondary sources of data. A simple regression technique was used to accomplish the analysis. Results indicated that company income tax and Value Added Tax have a statistically significant impact on Nigeria's income generation. The report recommends the following actions: the government should make every effort to enhance the manner in which value-added tax is collected; all VAT agents should be committed and appear honest with regard to collection and payment Moreover, the country's tax base will grow as goods and services are taxed more which includes the activities of the informal sector.

International Journal of Economics and Financial Issues Tax Reforms and Tax Yield in Nigeria

This study estimates elasticity and buoyancy of various tax components as well as the impact of tax reforms on tax components in Nigeria between 1981 and 2014. Error correction mechanism (ECM) technique was employed in analyzing the data. The results revealed that: All the tax components were inelastic, there was a general improvement in post-reformed tax elasticities ranging from 0.199 to 1.28 with petroleum profit tax and the total tax revenue having coefficients >1, values of tax buoyancies were all positive and <1, with post reform samples buoyancies being greater than that of common samples ranging from 0.13 to 0.93, tax reform was further confirms to improve tax revenues by positive and significant coefficients of the dummies. Based on the findings, the study recommended that: Government should diversify the economy for more development as well as strengthening tax reforms in order to increase overall tax revenue.

Tax Revenue and Economic Development in Nigeria

Advances in Social Sciences Research Journal

This study investigated the impact of taxation on economic development of Nigeria from 2003 to 2017.Vector Error Correction Model (VECM), Augmented Dickey-Fuller (ADF) unit root test, Autoregressive Distributed Lag (ARDL) bounds test, Jarque-Bera Normality Test and Eigenvalue stability condition were utilised in this study. The study revealed that companies’ income tax, petroleum profit and value added tax have a long run impact of -0.225(p-value=0.000),-0.0005 (p-value=0.699), and 0.211(p-value=0.000) respectively on the economic development of Nigeria.It was concluded that taxation has a significant long run relationship with Nigeria’s economic development. The study recommended that the government should not increase companies’ income tax rate because it is detrimental to the economic development of the country in the long run, instead the government should increase the value added tax because it has the potentiality to improve economic development of Nigeria. Also, the governmen...

Tax Reforms and Nigeria’s Economic Stability

International Journal of Applied Economics, Finance and Accounting, 2018

Tax reforms represent a fundamental strategy of a country's fiscal consolidation and governance. In this study, we examine the effect of tax reforms on economic stability of Nigeria over a 16-year period, 2000-2015. The study used a transformed econometric linear model to assess how and to what extent tax reforms support economic stability, proxied by gross domestic product (GDP). We identify company income tax and petroleum profit tax as key levers to Nigeria's fiscal stability. However, while VAT reforms have positive relationship with economic stability, the effect is negligible. Although every tax reform has a positive effect on revenue accretion, greater attention should be paid to those components of fiscal reform that have prospective significant positive consequences on economic growth and stability as against a blanket reform proposal that includes aspects with a potential negative outcome. A decision-analytic prognosis about the governance architecture of Nigeria's tax ecosystem suggests (a) that effective and efficient tax administration, as a component of fiscal policy, is central to a country's fiscal management, macroeconomic growth and stability, and (b) an urgent improvement to validate the certainty and administrative integrity and transparency of the tax regime. In general, macroeconomic reforms, more so in SSA countries, must develop targeted and industry-focused fiscal initiatives and programmes that will stimulate productivity, competitiveness, efficiency, employment growth Funding: This study received no special financial support.

TAX POLICY AND REVENUE GENERATION IN NIGERIA

Global Research Journal of Economic and Social Development, 2021

Taxation, besides its revenue generation capacity, can also be used as a fiscal policy tool to shape the economy. Considering that the Nigerian tax laws have witnessed significant changes over the period, it becomes imperative to assess the performance of such policies through its effect on the revenue generation in Nigeria. This study, therefore, examines the tax policy and revenue generation in Nigeria, the various tax incentives currently available in the different tax laws, evaluates how taxation and tax policies have affected the economy of Nigeria and the effectiveness of tax policy peroxide by indirect tax policy and tax incentive policy as a government strategy tool for alternate revenue generation. Design/Methodology/Approach: The research was carried out using primary data with the use of structured questionnaire which sought responses from FIRS, tax consultants and taxpayers which was analyzed using multiple regressions to find relationship among the variables. With a positive correlation of 0.279 and 0.265 on indirect tax policy and tax incentive policy respectively Finding: The study found that, tax policies have a significant relationship with the revenue generation of Nigeria. Originality/Value Added: The study, therefore, recommends that government should focus on indirect taxes to increase revenue collection with low administrative costs and compliance challenges. The chartered tax practitioners should be allowed to play leading roles in tax policy and implementation to ensure a robust tax system. Government should always consider tax payers and other key stakeholders' interests in fiscal policy formulation and implementation in order to achieve improved tax compliance rate in the country. All government agencies and other stakeholders should ensure the full adherence to the provisions of the National tax policy.

Empirical Analysis of the Buoyancy and Elasticity of Tax in Nigeria

Journal of economics and sustainable development, 2015

Many countries in the world have greatly sponsored their government expenditures with the aid of tax revenue, and owe their developments to this internally generated revenue. The rate of increase depends on the elasticity and buoyancy of tax and it is on this premise that, this study investigated the elasticity and buoyancy of tax in an attempt to ascertain its flexibility and hence the possibility of increasing the tax base in Nigeria. The results of the study therefore suggest that aggregate revenue is relatively elastic and significantly buoyant according to the 2004 tax reforms. And the results of the four major taxes tested showed that only PPT was found to be relatively elastic while VAT, CED and CID were relatively inelastic. However the results further suggest that, while VAT and CIT are not significantly buoyant according to the 2004 tax reforms, PPT and CED are significantly buoyant. Finally, the study used the 2005 structural break to establish that aggregate tax revenue dropped significantly after the boom period. The study therefore concludes that tax in Nigeria is relatively flexible with respect to growth and therefore more could be done to increase it.