Tax revenue sustainability and macroeconomic stability in Nigeria: a time-series analysis (2000–2024).

Purpose- This study examines whether more sustainable tax revenue translates into a more stable Nigerian economy, using annual data from 2000 to 2024. Methodology- Three dimensions of tax sustainability were tested against three macroeconomic outcomes: the tax-to-GDP ratio against output volatility, tax buoyancy against inflation, and non-oil tax composition against unemployment. The analysis draws on ARDL bounds testing, VECM, Johansen cointegration, and the Toda-Yamamoto causality test, with data sourced from the Central Bank of Nigeria, FIRS, and the National Bureau of Statistics. Findings- The results are consistent across all three models: a higher tax-to-GDP ratio reduces output volatility (β = −0.4231, p < 0.05), stronger tax buoyancy pulls inflation down (β = −2.176, p < 0.05), and a greater non-oil share in the tax mix lowers unemployment (β = −0.6814, p < 0.05). Error correction terms confirm that each relationship holds over the long run, and diagnostic tests clear the models on serial correlation, heteroskedasticity, normality, and structural stability. Conclusion- Nigeria's persistent output swings, inflation, and unemployment are not just economic problems, they are the predictable outcome of a tax system that has never been built to sustain them. Keywords: Tax revenue sustainability, Tax-to-GDP ratio, tax buoyancy, tax structure, macroeconomic stability