FEDERAL TAX REVENUE AND GROSS FIXED CAPITAL FORMATION: A STUDY OF NIGERIA

Abstract

This research determined the impact of Tax Revenue on Gross Fixed Capital Formation in Nigeria, utilizing Value Added Tax and Personal Income Tax as indicators of tax revenue from 2004 to 2024. The time series data were sourced from the Federal Inland Revenue Services, the Central Bank of Nigeria, the National Bureau of Statistics, and publications from the World Bank. Multiple regression analysis was applied to test hypotheses. The results clearly showed that components of tax revenue had a significant impact on gross fixed capital formation at the 5% level. The research thus concludes that value added tax and personal income tax significantly influence gross fixed capital formation in Nigeria at a 5% significance level. Therefore, the study recommended among others that the government needs to recognize that implementing VAT guarantees that international trade operates transparently and prevents distortions such as tax cascading linked to other commodity taxes.