Is Tax Income Pertinent to Government Contributions to Pensions and Gratuities Empirical Verdict from CoIntegration

Abstract

This study examines the impact of tax income on government contributions to pension and gratuities in Nigeria. Data were mainly sourced from the bulletin of Nigeria Central Bank from 1981 to 2021. The sourced and gathered data were scrutinized thoroughly with VECM, regression, and selected lag package as well as the Co-integration (JFTC) test, Normality test, and test of stability. It was discovered that tax impacted pension and gratuities positively. Also, oil revenue enhances the prompt payment of pensions and gratuities in Nigeria. The income from the federation account and Federal retained income also impacted pension and gratuities positively, statistically, and insignificantly. Government expenditure has been discovered to have a positive influence on pensions and gratuities. Conclusively, taxation income has a positive significant, statistical, and economic influence on government contribution to Pensions and gratuities in Nigeria both in the short and long run. It is recommended that once the pension and the gratuity are the lasting hope of the retirees to readjust themselves properly after retiring from employment, the government should remit a certain percentage from tax income monthly and regularly in proportion to retirees' numbers so that the payment of pensions and gratuities will not be delayed when the needs arise. Keywords: Tax income, government contributions, pensions and gratuities, oil revenue; federation account JEL Classification: H200; H550; H270.