Abstract
AbstractAn evaluation of the quality of governance as a major determinant of tax revenue generation is important to both the government and the Nigerian public. It has become required as a result of many rising economies’ reliance on several taxes to raise income. Tax income generation is crucial to the fulfillment of the Sustainable Development Goals (SDGs) and rising economies’ economic progress. This study addresses the influence of both political (political stability), institutional (corruption) and bad governance on the mobilization of tax revenue in Nigeria. To serve this purpose, the study employed a time series data set from 2000 to 2020. After subjecting the data to the unit root test, the study further employs Ordinary Least Square (OLS). The findings revealed that corruption and political instability have a positive and significant impact on Nigeria’s tax revenue mobilization. Bad governance, on the other hand, has a positive and insignificant influence on Nigeria’s tax revenue mobilization. The study focuses on improving governance quality by lowering corruption rates and increasing transparency in tax administration. To accomplish so, countries must execute policy reforms such as establishing an effective and strict judicial system, offering monetary incentives for tax officers to lower the risk of corruption, and, most crucially, broadening the revenue base rather than raising tax rates. As a result, the tax administration will improve, and the economy’s overall tax revenue collection will improve.
Highlights
5.1 Theoretical Findings According to the benefit received theory and other theories discussed in this literature, corruption, political stability should all have a positive relationship with tax revenue mobilization
5.2 Empirical Findings The results of this study revealed a positive correlation between corruption and Nigeria's tax revenue mobilization
This study demonstrates that the ability of the government to control corruption and substantially reduce corruption in Nigeria contributes to the improvement of citizens' morale to pay taxes
Summary
Despite the fact that taxation is an important tool for fiscal policy in mobilizing resources and promoting capital formation in the public sector, there is a significant mismatch between the ever-increasing demand for government expenditure and the limited scope of tax revenue raised to finance such development scenarios, indicating that low-income countries face a tax revenue challenge (Saibu & Olasunbo, 2013; Joyce, 2014). In Nigeria, the hunt for a long-term source of public funding has placed taxation at the forefront of public debate and attention. This is exacerbated by falling oil revenues, which has led to a greater reliance on debt to fund the country's annual budget. The Minister of Finance has backed this up with repeated recommendations to increase domestic resource mobilization, emphasizing revenue
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