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Nigeria Journal of Management Sciences (NJMS), Benue State University

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Tax Revenue And Economic Development Of The Nigerian Economy

Abel O. IDEH,
Department of Accounting and Finance Faculty of the Social Sciences Delta State University, Abraka

Abstract

This study is designed to assess the relationship between components of tax revenue and economic development of the Nigerian economy. For this purpose, the ex-post facto research design was adopted and secondary time series data were sourced from relevant records of appropriate authorities for the study period (2003 – 2017). The components of tax revenue assessed in this study included value added tax, petroleum profit tax, personal income tax, company income tax and custom and excise duties, whereas, economic development was measured by real GDP and Human Development Index (HDI). The data were analyzed using the Autoregressive Distributed Lag technique alongside other necessary statistical tools. The results obtained from the study have far reaching policy implications. Specifically, we observed amongst others that even though petroleum profit tax stood as a major component of tax revenue, its relationship with measures of economic development (real GDP and HDI) were negative; thus suggesting that revenue generated from petroleum profit tax are not properly and directly channeled to the provision of the required infrastructure that will boost the economic development of Nigeria. Based on the above, we recommend that significant portions of the revenue generated from PPT and other sources should be designated and properly channeled to infrastructural development.

Keywords: Tax; Revenue, Infrastructure, Economic Development; Fiscal Policy; Nigeria

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