Empirical Investigation of Government Expenditure and Tax Payers Compliance in Nigeria

Abstract

The research looks at taxpayer compliance and government spending in Nigeria’s economy from 1992 to 2022. The CBN statistics bulletin from 2022 served as the source of the data. The research used many factors, including public capital spending, government recurrent expenditure, compliance with value-added tax, firm income tax compliance, and gross domestic product and put (GDP), as indicators of the Nigerian economy. Analytical methods for the research included time-series econometrics. Additionally, the analysis demonstrates that capital expenditures by the government significantly boost Nigeria’s GDP. Although insignificant, government recurrent spending has a favourable effect on Nigeria’s GDP. Nigeria’s gross domestic product benefits greatly from value-added tax compliance and Company income tax compliance. According to the coefficient of determination, changes in government spending variables may account for almost 78% of the fluctuations in the Nigerian economy. The paper concludes that government expenditure and tax payers’ compliance has a substantial outcome on the Nigerian economy. Recommendations are that, Government should reduce the amount set on value added tax and company income tax, to boost compliance and that generated tax revenue must be sufficiently, efficiently and judiciously utilized. Fiscal policies towards increase in recurrent expenditure should be the norm. Government should spend more on recurrent expenditure because it has a positive impact on the economy. Lastly, capital projects should be well supervised to ensure that it meets the needs of the people.