Corporate Income Tax and Sustainable Economic Growth: A Nigerian Perspective

This study evaluates the effect of corporate income tax on sustainable economic growth in Nigeria, covering the period from 1993 to 2023. The broad objective was to assess how corporate income tax influences economic growth, with specific emphasis on company income tax (CIT) and value-added tax (VAT) as proxies for corporate tax, and gross domestic product growth rate (GDPGR) as a measure of economic growth. The study adopted an ex-post facto research design since it relied on already existing secondary data obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and the National Bureau of Statistics (NBS). Using purposive sampling, data on company income tax, value-added tax, petroleum profit tax, education tax, import duty, and export duty were extracted. A multiple regression model was applied, while time series analysis and panel least squares techniques were employed to capture the dynamic effects of the variables. The findings revealed that company income tax exerts a positive and significant effect on GDP growth, with a probability value of 0.0065 and t-statistics of 2.951628. However, value-added tax demonstrated a negative but significant effect on GDP growth, with a probability value of 0.781 and t-statistics of 2.595134. Furthermore, control variables such as population growth also showed significant effects (p-value = 0.0155). The study concluded that different categories of corporate income taxes contribute variably to Nigeria’s economic growth, with some (e.g., VAT and export duty) exerting strong influences, while others (e.g., petroleum profit tax and import duty) have little or no effect. The study recommends that government tax policies should be restructured to stimulate economic growth rather than serve solely as revenue-generation mechanisms. In addition, Nigeria should diversify into alternative revenue sources such as non-tax revenues and investment-driven economic models to enhance sustainable development.