Effect of Tax Revenue Generation on Economic Growth in Nigeria

Abstract

The contribution of taxation to all economies around the world cannot be exaggerated. Apart from the revenue function it performs for the government, it is also used to help the country achieve its macroeconomic goals in the areas of fiscal and monetary policy. While a significant portion of Nigeria's income comes from taxes, it has long been observed that the role of taxation in stimulating economic activity and growth remains unrecognized especially in the area of infrastructure and basic equipment. Earlier documents have shown that tax revenues in developed countries have a significant impact on economic growth, which is clearly reflected in the services provided by these countries. Therefore, the main purpose of this study is to investigate the relationship between Nigerian tax revenues and economic growth in Nigeria. Multiple linear regression analysis was used to analyze the data using the Microsoft Excel package. As a result, petroleum profit tax, company income tax and value added tax have a positive impact on Nigeria's economic growth, while custom excise and duties have a negative impact, but overall, between tax revenue and Nigeria's economic growth, there is a significant correlation. The use of generated tax revenue is a serious concern, requires special attention of policy makers, taxpayer violations of tax law are obstacles, and inefficient tax administration is a sufficient loophole for tax evasion. As a result, income is reduced. In particular, the Tax Administration is only responsible for qualified professionals and trusted persons, and it is advisable to thoroughly educate the importance of taxes for the entire population.