The impact of tax revenue on economic growth in Nigeria

Abstract The study examined the impact of tax revenue on economic growth in Nigeria, looking at the effect of petroleum profit tax, company income tax, value added tax, and custom and excise duty tax on economic growth from 1990 to 2022. The study employed human development index as an indicator of economic growth. Secondary data were used and obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin, Federal Inland Revenue Services (FIRS) database and the United Nations Development Report Database. The method of analysis employed include the autoregressive distributed lag (ARDL) method used to estimate the long- and short-run impact of tax revenue on economic growth, unit root and cointegration tests to determine the stationarity process of the series and long-run equilibrium relationship among the variables. The study using the bounds test found evidence of long-run equilibrium relationship between tax revenue and economic growth. The ARDL result revealed that the three regressors of petroleum profit tax, company income tax and custom and excise duty had insignificant negative effect of human development index, as empirical result indicated that value added tax improved human development index, but not significantly. The study recommend that the Federal Government should intensify efforts towards increasing the collection of tax revenue by digitalizing the tax filing and collection process and blocking tax loopholes exploited to shortchange government tax revenue. Keywords: Tax revenue, Economic Growth, Human Development Index, Petroleum Profit Tax