Effect of Tax Policy on Unemployment in Nigeria

Abstract

This Study examined the effect of tax policy on unemployment in Nigeria, using aggregate time series data from 1981 to 2017. Relevant data was sourced from the Central Bank of Nigeria Statistical Bulletin and were estimated using the Ordinary Least Square technique. The results of the analysis showed that tax policy has significant long run impact on unemployment in Nigeria. Specifically Company income tax, Personal income tax and Customs and excise duty have inverse relationship with unemployment in Nigeria, while Value added tax showed positive relationship. Thus government should factor in tax policy when formulating policies that are meant to reduce unemployment in Nigeria. Based on findings of the study, the following recommendations were made; provision of adequate infrastructures by the government, elimination of multiple taxes as well as adjusting tax rates to encourage investments. Keywords: Tax revenue, Unemployment, Company income tax, Value added tax, Personal income tax, Custom and Excise duty, Nigeria. DOI : 10.7176/RJFA/10-12-13 Publication date :June 30 th 2019