Effect of Tax Reform on Government Revenues in Nigeria

Abstract

The study investigated the effect of Tax Reform on government revenue in Nigeria. The broad objective of the study is to determine the effect of tax reform on government revenue in Nigeria. The study explored how: Company Income Tax (CIT), Value Added Tax (VAT), Capital Gains Tax (CGT) and Custom Duties as proxies for tax reform’s effect on government revenue in Nigeria. Ex-post facto research design was chosen for the study and formulated hypotheses were tested with Ordinary Least Square regression technique (OLS) at 5% level of significant, Augmented Dickey Fuller (unit root test) was used to ascertain the stationary state of the time series variables. Secondary data were collected from the CBN bulletin and National Bureau of statistics (NBS) reports spanning from 2014-2023 a period of ten years. The results from the analysis of the study revealed that almost all the variables have a joint significant influence on the government revenue in Nigeria. Company Income Tax (CIT) have significant positive effect on total tax revenue with a P –value  of 0.0000: Value Added Tax (VAT)  and Capital Gains Tax (CGT) have a positive but non-significant effect on government revenue with a P-value of 0.5564 and 0.4857 respectively. Customs and Excise duty has no significant positive effect on government revenue in Nigeria with a P-value of 0.0380. The study concludes that tax reform affects government revenue and therefore, recommends that government through the assistance of  FIRS should gears towards sustaining appreciable level of government revenue through company income tax  by ensuring strict adherence to the provisions of tax reform on Company Income Tax Act.