Abstract
This study examined tax revenue and budget implementation in Nigeria. Secondary method of data collection was adopted for a period of 40 quarters from 2008Q1 to 2017Q4. The study made use of Fully Modified Least Square (FMOLS) and Error Correction Model (ECM) based on ARDL approach, after conducted pretest such as unit root test, and co-integration test. Result showed that tax revenue including petroleum profit tax and company income contributes positively and significantly to capital budget implementation in Nigeria, while custom and excise duties significantly and negative affect capital budget implementation in Nigeria; that custom & excise duties as well as value added tax contributes significantly and positively to recurrent budget implementation in Nigeria, while tax revenue from petroleum profit tax significantly and negatively influences recurrent budget implementation in the country. Hence the study recommends that government should engage more of tax revenue generated from both petroleum profit tax and company income tax toward capital projects in the country, rather than recurrent expenditure and collection cost minimization strategy should be device by government through the federal inland revenue services and other tax regulatory bodies especially in terms of both customs & excise duties and value added tax, so as to ensure that proceed from these sources can contribute largely to capital budget implementation.
Highlights
Tax revenue is one of the major sources of revenue for government both in developed and developing nations
The study recommends that government should engage more of tax revenue generated from both petroleum profit tax and company income tax toward capital projects in the country, rather than recurrent expenditure and collection cost minimization strategy should be device by government through the federal inland revenue services and other tax regulatory bodies especially in terms of both customs & excise duties and value added tax, so as to ensure that proceed from these sources can contribute largely to capital budget implementation
As relayed in the budget implementation reports for 2015, 2016 and 2017, actual total expenditure has always fallen short of the budget figure; for instance in 2015 actual expenditure stood at 4767 billion naira, as against 5067.90 billion naira budgeted; in 2016 actual stood at 4396.24 billion naira as against budget value of 6060.48 billion naira, while as at the third quarter of 2017 actual expenditure stood at 4145.53 billion naira, out of the 7441.18 billion naira budget for the year
Summary
Tax revenue is one of the major sources of revenue for government both in developed and developing nations. Tax revenue in most African countries have continued to swing upward in the past five (5) years following a sharp decline in government revenue from both the end of the so-called commodities super-cycle and the oil price crash of mid/late 2014 [1]. In clear term tax revenue is becoming more recognized and harnessed by developing nations of the world for ensuring effective and efficient expenditure execution for better budget implementation. In Nigeria revenue from non-oil taxes such as company income tax, valued added tax and custom and excise duties has been on the rise in recent years. Rise in actual company income tax in the same period frame was from 245 billion to 543 billion naira while that of custom and excise duties stood between 136.28 billion to 151.68 billion naira. As relayed in the budget implementation reports for 2015, 2016 and 2017, actual total expenditure has always fallen short of the budget figure; for instance in 2015 actual expenditure stood at 4767 billion naira, as against 5067.90 billion naira budgeted; in 2016 actual stood at 4396.24 billion naira as against budget value of 6060.48 billion naira, while as at the third quarter of 2017 actual expenditure stood at 4145.53 billion naira, out of the 7441.18 billion naira budget for the year
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