Evaluating the impact of non-oil tax revenue on Nigerian economic performance

Abstract

This study is focused on investigating whether there is any significant relationship between non-oil tax revenue and Nigerian economic performance from 1985 to 2071. Data for this research study were secondary sources generated from the annual reports and statements of the Federal Inland Revenue Service, the Nigerian Bureau of Statistics and the Central Bank of Nigeria. The ordinary least square was used to evaluate the strength of the relationship between the variables. The results of the analysis show a positive and significant relationship between companies’ income tax and gross domestic product; however the relationship between personal income tax and gross domestic product is only positive but not significant. The study concludes therefore that non-oil tax revenue has the potential to improve Nigerian economic performance as the explanatory variables indicated a positive signs. Based on the findings and the conclusion drawn, the study recommends among others that the Nigerian government and its revenue agencies should redefine the existing policy on company income tax by having intensified policy direction aimed at encouraging diversification and entrepreneurial development especially in the tourism, entertainment, information communication technology, medical services and solid mineral sectors. Policy direction should also be geared towards the development of the manufacturing and agro-allied sectors. This will not only expand the tax base but also boost the gross domestic product and by extension the economic performance. For personal income tax, it is recommended that tenet of fiscal transparency and accountability of revenue mobilized for the betterment of the people should be employed and implemented to encourage taxable persons to voluntarily and honestly disclose their aggregate incomes for tax purposes.