Tax revenue reformation and macro-economic performance in Nigeria

Adedoyin Temilade Akinola

doi:10.65453/ajbmr.153.1510

Authors

Adedoyin Temilade Akinola Department of Economics, Mountaintop University, Ibafo, Ogun State, Nigeria.

DOI:

https://doi.org/10.65453/ajbmr.153.1510

Keywords:

Company income tax, Economic growth, Macroeconomic Performance, Petroleum profit tax, Tax Revenue Reformation, Value-added tax

Abstract

The overall health and well-being of a nation are reflected in its macroeconomic performance, which is typically measured by gross domestic product, interest rates, inflation, and the unemployment rate. Over the years, Nigeria's macroeconomic performance has been affected by various factors, including taxation, exchange rate fluctuations, corruption, price changes, and insecurity. The specific objectives of this study are to examine the effect of tax revenue reformation on economic growth in Nigeria, investigate the impact of tax revenue on the unemployment rate, assess the influence of tax revenue reformation on the inflation rate, and analyze the causal relationship between tax revenue reformation and economic growth in Nigeria. The error correction model technique was utilized to examine the effect of tax revenue reformation on macroeconomic performance in Nigeria. This study covers the time period from 2000 to 2024. The study highlights that total tax revenue, petroleum profit tax and value-added tax has a negative long-run association with gross domestic product, while company income tax has a positive long-run relationship with gross domestic product. Second, total tax revenue has a negative long-run association with unemployment, while petroleum profit tax, value added tax and company income tax have a positive long-run connection with unemployment. There exists a unidirectional causality between total tax revenue and economic growth. The study recommends that total tax revenue, petroleum profit tax, and value-added tax should be utilized effectively by the government in order to foster significant economic growth in the long-run.

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