TAX STRUCTURE AND ECONOMIC PERFORMANCE IN NIGERIA

Abstract This study investigates the relationship between tax structure and economic performance in Nigeria. Gross domestic product growth rate and per capital income were proxy for the dependent variables, while direct taxes, indirect taxes. Time series data were sourced between 1996 and 2024, the result of the stationarity test showed the presence of mixed order integration among the variables, this necessitated the use of the Autoregressive Distributed Lag technique for statistical analysis, this technique captured both short-run dynamics and long-run equilibrium relationships. The study uses the Trickle-Down Theory as a theoretical framework and focuses on the transmission of macro benefits in the form of effective taxation and governance. Empirical evidence indicates that indirect taxation positively and statistically impacts both the growth rate of the gross domestic product as well as per capita income, while direct taxation provides a negative and significant impact on per capita income but a statistically insignificant result concerning the growth rate of the gross domestic product. These findings are partly consistent with the apriori expectations and highlight the differential impacts of tax types on macro indicators. This study's findings augment the extant literature of fiscal efficiency in the context of the developing economy by highlighting the prevalence of indirect taxation in promoting the growth of the economy. Hence, the study recommends that there is need to expand value added tax base, at the same time reduce the burden of direct tax on low-income earner.