IMPACT OF TAX STRUCTURE ON ECONOMIC GROWTH IN NIGERIA

Abstract

This study examined the relationship among tax structure, poverty and economic growth in Nigeria. Specifically, this study investigated the impact of tax structure on economic growth in Nigeria. Secondary data sourced from Central Bank of Nigeria Statistical Bulletin, Federal Inland Revenue Services and WDI were used. The main explanatory variables are the tax structure variables which include personal income tax (PIT), value added tax (VAT), company income tax (CIT) and petroleum profit tax (PPT), while the dependent variable is economic growth. Augmented Dickey Fuller (ADF), Phillips-Perron (PP) and Autoregressive Distributed Lagged (ARDL) Bound tests, and Error Correction Model (ECM) techniques were adopted. The results revealed that personal income tax and value added tax have significant negative effects on economic growth, but company income tax and petroleum profit tax have significant positive effect on economic growth. Also, the lagged value of personal income tax has a significant effect on economic growth. In same manner, the lagged value of value added tax has significant negative effect on economic growth. Therefore, the study concluded that tax structure significantly impacts on poverty and economic growth in Nigeria.