Impact of Nigeria's Tax Reform System on economic Growth

Tax reform remains a critical instrument for fostering sustainable economic growth, particularly in developing economies with weak fiscal structures. Nigeria’s overreliance on oil revenues and persistent challenges of tax evasion, a narrow tax base, and administrative inefficiencies have necessitated several tax reform initiatives. This paper empirically investigates the relationship between tax reforms and economic growth in Nigeria using annual data from 1981 to 2023. Employing a simulated time-series dataset that mirrors Nigeria’s fiscal realities, we estimate the impact of key tax revenue components including Value Added Tax (VAT), Company Income Tax (CIT), Personal Income Tax (PIT), Customs and Excise Duties, and Petroleum Profit Tax (PPT) on gross domestic product (GDP) growth. Preliminary findings suggest that VAT and CIT exert a significant positive effect on GDP growth, while PPT demonstrates a declining contribution due to the volatility of global oil prices. The study highlights the importance of broadening Nigeria’s tax base, strengthening enforcement through digital innovations, and aligning tax reforms with inclusive economic development. Policy recommendations focus on institutional reforms within the Federal Inland Revenue Service (FIRS), improving compliance culture, and leveraging non-oil tax sources for long-term economic sustainability.