Econometric Analysis of Taxation, Capital Formation and Economic Growth in Nigeria

Abstract

The study examined the link between Taxation, Capital Formation and their implication for Economic Growth in Nigeria. The study objective is against the background of the need to mobilize revenue to shore up the much-needed capital stock and infrastructure for economic growth. It employed descriptive statistics, Unit Root and ARDL to estimate the short and long-run correlation among the variables selected for the study. Findings arising from the study indicate a significant and negative relationship between inflation, taxation and economic growth in Nigeria. Similarly, there is a positive and significant correlation between broad money and Real Gross Domestic Product which implies that taxation and inflation negatively impact economic growth in Nigeria. Policy recommendation based on the findings includes the following: Government should ensure an efficient tax collection process and encourage investment in the Private Sector by reducing the tax burden on them.