Abstract
There has been conflicting preposition as to the extent of tax contribution to the development of Nigerian economy. This study is to determine the impact of taxation proceeds on the development of Nigerian economy. The study explored the impact of three tax income streams – Income tax from companies’ profits, income tax from petroleum companies profits  and Value Added Tax on economic development represented by Gross Domestic Product (at current basic prices) growth for the period 1994 to 2018. The study applied Ordinary Least Square statistical tool with the help of SPSS 20.0. The study revealed a positive relationship with a coefficient of determination of 99.2% of the variation in economic development attributable to the tax income streams studied. Also although the study revealed the existence of significant effect of taxes from companies’ profits and Value Added Tax on Gross Domestic Product Growth, there is little or no significant impact of taxes on profits of Petroleum companies on Gross Domestic Product growth in Nigeria due to restriction by Organization of Petroleum Exporting Countries production ceiling on Nigeria’s production/sales and the global price shocks of crude oil over the decade. Also the study revealed tax payers apathy to tax payment and presence of tax leakages due to corruption and administrative inefficiencies by the tax authorities.
Highlights
The world over, economic development is an important construct for discourse as its relevance can never be over-emphasized
Okeke et al (2018) study that examined the relationship between tax revenue and economic development measured by infant mortality, labour force and fixed capital formation in Nigeria revealed tax revenue has a statistically significant relationship with economic growth measured by infant mortality, labor force and gross fixed capital formation
This study revealed a significant relationship exists between Petroleum Profit Tax and Gross Domestic Product Growth measuring economic development
Summary
The world over, economic development is an important construct for discourse as its relevance can never be over-emphasized. Development in a country spans across array of visible outputs as indicators. These include critical infrastructures, human capital improvement, advancement in technology, expansion in commerce and so on. Most often development and growth are used inter-changeably; the difference between these constructs is that while growth is concerned about the total output of a nation within a defined period, development is concerned about visible output in an economy. Economic development in Nigeria started before colonial era many economic activities that took place during that time were not documented. Since Nigeria has undergone numerous economic developmental plans all geared toward visible outputs. Notable amongst them are the Structural Adjustment Programme (SAP) of the military administration of Ibrahim Badamosi Babangida in the 80’s, the Sure-P programme of the Goodluck Ebele Jonathan’s administration, and the current N-Power programme of the Mohamadu Buhari’s administration
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