EFFECT OF TAXATION ON ECONOMIC GROWTH IN NIGERIA
Keywords:
Company Income Tax, Economic Growth, Petroleum Profit Tax, Taxation, Value Added TaxAbstract
This study assessed the effect of taxation on economic growth in Nigeria. There is the issue of under assessment of tax payers, poor administration of tax and connivance of tax payers and collectors leading to collecting less amount than expected. These amongst others are challenges hampering the adequate tax revenue generation to government that could help fund infrastructures that will spur economic growth. The specific objectives were to assess: the effect of petroleum profit tax (PPT), company income tax (CIT), value added tax (VAT), education tax (EDUTAX) and gas income (GASINC) on gross domestic product (GDP) of Nigeria. Taxation proxies were PPT, CIT, VAT, EDUTAX and GASINC, while the dependent variable was GDP. Five hypotheses guided the study and were tested at 5% level of significance. The research design was ex-post-facto, while descriptive statistics and multiple regression were used to analyze the data. The regression output showed that PPT had negative but significant effect on GDP; CIT had positive and non-significant effect on GDP; VAT had positive and significant effect on GDP; EDUTAX had positive but non-significant effect on GDP while GASINC had negative and non-significant effect on GDP. The prob (F-stat) was 0.000192 while R-squared value was 0.942871. The study recommended among others that the government should improve petroleum profit tax administration, blockage of leakages and judicious use of the revenue in productive sectors of the economy. Also, the government should properly harness the income from company tax as a macro-economic tool for economic growth. Furthermore, the government should continue to sustain the value added tax collection and investment measures so as to maintain its positive and significant effect on gross domestic product.
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