Non-Oil Revenue and Economic Growth in Nigeria

Adeniyi Adekiite Adeusi ,Emmanuel Uniamikogbo ,Omoefe Emmanuel Erah ,Aggreh Meshack

doi:10.7176/rjfa/11-8-10

Abstract

This study examined the effect of non-oil revenue on economic growth in Nigeria. The four specific variables proxy for non-oil revenue are: Value Added Tax, Companies Income Tax, Personal Income Tax and Custom & Excise Duties, while Gross Domestic Product was used to represent economic growth in Nigeria. The study population consists of all individuals, corporation soles and corporate organisations whose taxes were paid to the Nigerian government except firms operating in the upstream industry. The study sample consists the entire population of study using the census sampling approach. The secondary source of data collection method was used in generating data from the Federal Inland Revenue Service Statistical bulletin of 2018 and the National Bureau of Statistics of 2019 for the period 1994-2018. The descriptive statistics and Ordinary Least Square (OLS) regression techniques were used to analysed the data collected. The study findings revealed that indirect taxes (Custom & Excise Duties and Value Added Tax) have more significant positive effect on the Nigerian economic growth than direct taxes (Companies Income Tax and Personal Income Tax). Also, direct taxes have significant but negative effect on the Nigerian economic growth, especially in the long run. It is therefore recommend that simple and transparent tax laws be enacted to regulate the tax regimes in Nigeria in order to avoid any form of illicit strategic tax behaviour by management. Also, the problems of implementation of good tax reforms policies should be eliminated. Tax authority should provide strategies to strengthen the control on the significant variables identified in this study analysis. Keywords: Tax revenue, economic growth, gross domestic product, direct tax, indirect tax. DOI: 10.7176/RJFA/11-8-10 Publication date: April 30 th 2020

Highlights

The level of economic growth of any nation depends largely on the amount of revenue generated and channeled towards the development of the country
The continue increase in government responsibilities and her inability to meet up with her financial challenges resulting from increasing size in population and infrastructural decay attributed to dwindling oil price and prevailing inflationary situation of the country which erodes the value of funds available to render essential social service to the people (Nimenibo, Samuel, Eyo, Mni & Friday, 2018) have forced Nigeria government to source for alternative revenue generating source
The study findings revealed that Capital Gains Tax, Stamp Duty, Education Tax and Petroleum Profit Tax are positive and significant while Company Income Tax and Value Added Tax are not significant

Summary

Introduction

The level of economic growth of any nation depends largely on the amount of revenue generated and channeled towards the development of the country. The continue increase in government responsibilities and her inability to meet up with her financial challenges resulting from increasing size in population and infrastructural decay attributed to dwindling oil price and prevailing inflationary situation of the country which erodes the value of funds available to render essential social service to the people (Nimenibo, Samuel, Eyo, Mni & Friday, 2018) have forced Nigeria government to source for alternative revenue generating source. Tax is a mandatory charge levied on a tax payer or upon his estate by the sovereign institution to generate needed revenue required for providing social amenities, security, and make available favourable conditions for the economic welfare of the people (Appah & Oyandonghan, 2011). Government imposed tax on her citizens for the purposes of revenue generation to finance her expenditures, redistribution of income and wealth to reduce income inequalities, protection of weak or infant industry, regulation of macro-economy, curb inflation, and so on (Anyanfo, 1996)

Objectives

Findings

Discussion

Conclusion