Taxation as a Stimulus for Economic Growth in Nigeria

Patrick Kanayo Adigwe ,Oyadonghan Kereotu James

doi:10.7176/rjfa/11-2-07

Abstract

This study examined taxation as a stimulus for economic growth and development in Nigeria. The problem of over dependence in oil income has marred the nation sustainable development, several scholars and agencies are clamouring for revenue diversification for the economy. Since technological growth is a long way to achieve in the economy, tax could be considered as an immediate option to the problem. Tax is a major source of government revenue all over the world and Nigeria is not an exception. The tax system is an opportunity for the government to assemble extra revenue needed in discharging economic development and creating a conducive business environment for its citizens. This study used yearly time series data from the Central Bank of Nigeria (CBN) Statistical Bulletin for the period of 2009 to 2018 and a linear model of Corporate Income Tax (CIT), Value Added Tax (VAT) and Economic Growth (GDP) was appraised using the Ordinary Least Square (OLS) technique. The results gotten from this study revealed that the hypothesized connection among corporate income tax, value added tax and economic growth really exist in Nigeria. Thus the result gives the confirmation that taxation is indeed a stimulus for economic growth and development in Nigeria. This conclusion has revealed the need for government to institute extra methods or processes that will make taxpayers not to avoid and evade tax so that revenue can be properly generated, and income effectively redistributed and allocated in the economy. Keywords : Taxation, Economic growth, Development, Gross Domestic Product DOI : 10.7176/RJFA/11-2-07 Publication date: January 31 st 2020

Highlights

The growth and development of a country is influenced by the amount of income set aside for the provision of infrastructure
From the results evaluated in the table above, the independent variables (CIT and Value Added Tax (VAT)) were correlated perfectly and there is a multi-collinearity in the result with the dependent variable (GDP) constant with 1
This study has discovered that there is a relationship between some parameters of taxation

Summary

Introduction

The growth and development of a country is influenced by the amount of income set aside for the provision of infrastructure. The significance of taxation in the activities of any government cannot be ignored because it is one of the major sources of government income used for promoting economic growth and development in a country. The following research questions are formulated to guide the study: www.iiste.org (i) What degree has taxation through Corporate Income Tax and Value Added Tax contributed to economic growth and development in Nigeria?

Results

Conclusion