Tax Revenue and Economic Development in Nigeria

Abstract

The study used ARDL model to examine tax revenue and economic development in Nigeria from 1999-2020. Thus, the objective is to determine the impact of indirect tax revenue (import duty and export duty) on economic development in Nigeria. This study employed ex-post- facto research design and used semi-annual data collected from Central Bank of Nigeria (CBN) statistical bulletin. The study adopted the econometric analysis of unit root test and the technique of auto regressive distributed lag (ARDL) model. Based on the empirical results, exports tax revenue positively impacted on economic development, while imports tax revenue has negative and insignificant relationship with economic development in Nigeria during the period of study. The implications of the finding is that the Nigerian government can boost economic growth and development by realizing the need to focus on boosting tax revenue from indirect tax sources while expanding the catchment of those liable to pay indirect taxes. Based on the findings of it was recommended that, government should formulate and implement export policy measures towards exporting goods that are growth and development drivers, particularly, refined goods in the area the nation has comparative advantage in order to make the domestic production viable and compete with the industrialized economy of the world. Also, government should identify administrative loopholes that drain the revenue from custom duties so that import tax revenue will contribute significantly to economic development.