Abstract
This study examined the influence of tax revenue on government capital expenditure and economic growth in Nigeria. It specifically evaluated the significant effect of companies’ income tax on government capital expenditure in Nigeria; the level of significance of petroleum profit tax on government capital expenditure in Nigeria; the significant impact of value added tax on government capital expenditure in Nigeria; and the long run relationship between tax revenue and government capital expenditure in Nigeria. The study used relevant secondary data that span from 2009 to 2018 extracted from series of published central bank statistical bulletins. Public finance analysis model (CAPEX= f (CIT, PPT, VAT)) was formulated and was tested with the use of descriptive analysis in the form of minimum and maximum values, mean and coefficient of variation, while inferential statistics in the form of multiple regression, T-Test, Johansen’s co-integration test, coefficient of multiple determinations, F-test, DW-test. Findings revealed that Companies’ Income Tax had a positive relationship with capital expenditure; Petroleum profit tax (PPT) had a negative effect on the financing of government development project; value added tax (VAT) had insignificant positive relationship with total government capital expenditure (CAPEX). It is concluded that tax revenue does not impact the spending on capital expenditure. The study recommended that utilization of tax revenue on public goods will encourage the payment of tax by tax payers. Keywords: Economic Growth, Government Capital Expenditure, Government Expenditure, Tax Revenue, Taxation DOI : 10.7176/EJBM/11-2-05
Highlights
In the country we are today, different irregularities leading to public outcry and perpetual increasing fraud in government sector activities resulting from an inappropriate public finance planning and implementation mostly in some of the developing countries
The data obtained were based on the variables identified in the research hypotheses which are: explained variable which is captured by the Government Capital Expenditure (CAPEX) and four explanatory variables which are companies’ income tax (CIT), petroleum profit tax (PPT), value added tax (VAT) and total tax revenue (TTR)
The Adjusted R2 further prove this with the adjusted value of 0.324311which implies a 32.43 per cent explanation of the behaviour of capital expenditure is by the totality of the explanatory variables with the remaining 67.57 per cent behaviour attributed to other variables outside the model otherwise referred to as the stochastic variables
Summary
In the country we are today, different irregularities leading to public outcry and perpetual increasing fraud in government sector activities resulting from an inappropriate public finance planning and implementation mostly in some of the developing countries. Banks and businesses organizations were collapsing thereby leading to crisis of confidence in internal and external activities in the country due to poor governance. The reason behind this is corruption, indiscipline, lack of accountability which is the hall marks of our society in developing countries resulting into decrease in growth and development. Economic growth has provided insight into why state growth at different rates over time; and this influence government in her choice of tax rates and expenditure levels that will influence the growth rates (Nazifi, 2014 & Nwaeze 2010)
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