EFFECTS OF DISAGGREGATED TAX REVENUES ON ECONOMIC GROWTH IN NIGERIA (1995-2023): ARDL BOUND TEST APPROACH

Abstract

<p>Tax revenue has been a great tool of fiscal policy harnessed toward the economic development of a nation. Its different components have collective effects on the economic growth of a nation. This study examined the effects of disaggregated tax revenue on Nigeria's economic growth from 1995 to 2023. The data was sourced from the Central Bank of Nigeria and the Federal Inland Revenue Service databases. This study examined the effects of disaggregated tax revenue on Nigeria's economic growth from 1995 to 2023. The data was sourced from the Central Bank of Nigeria and the Federal Inland Revenue Service databases. Employing multiple regression analysis within an Autoregressive Distributed Lag (ARDL) model, the study assessed the impact of Value Added Tax (VAT), Companies Income Tax (CIT), Petroleum Profit Tax (PPT) and Personal Income Tax (PIT) on economic growth. The diagnostic tests confirmed the model's validity, with unit root tests showing that all variables, except PIT, achieved stationarity after differencing. The findings revealed that each tax revenue component positively influences economic growth. Based on these results, the study recommends enhancing the legal and regulatory frameworks for businesses, including regular evaluations and updates of tax laws and stronger enforcement mechanisms. It also underscores the need to strengthen anti-corruption efforts, promote property rights, uphold the rule of law, and prioritise good governance to foster public confidence and ensure the effective use of tax revenues for economic development.</p><p><strong>JEL: </strong>C32, H20, H24, H25</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0785/a.php" alt="Hit counter" /></p>