Forestalling Value Added Tax and Personal Income Tax on Economic Growth in Nigeria
- January 17, 2020
- Posted by: RSIS
- Categories: Accounting, IJRISS
International Journal of Research and Innovation in Social Science (IJRISS) | Volume IV, Issue I, January 2020 | ISSN 2454–6186
Forestalling Value Added Tax and Personal Income Tax on Economic Growth in Nigeria
Abdulsalam Nasiru, Kaoje(Ph.D)1, Abubakar Sabo, Yabo (Ph.D)2, Ahmad, Musbahu Bunza3
1,3Department of Accounting, Usmanu Danfodiyo University, Sokoto, Nigeria
2Department of Business Administration, Usmanu Danfodiyo University, Sokoto, Nigeria
Abstract: – This paper examined the impact of tax revenue on aggregate and disaggregate on economic growth in Nigeria covering a period of forty years (1979-2018). A purposive sampling technique was also used, adopting aARDL model. The result showed that Value Added Tax (VAT) has significance effect on gross domestic product with coefficient 0.4675 at 5% level of significance. Personal Income Tax (PIT) also has a positive significant effect on economic growth with coefficient 0.1975 with p-value of 5% level of significant. The overall result showed significant effect of tax revenue on aggregate on economic growth. The study then concluded that there is urgent need for government to prioritize her needs as petroleum revenue continues to decrease. Therefore the study recommends that government should try to diversify the economy as revenue generated from petroleum should be used to develop other sectors of income generation.
Keywords: Value Added Tax, Personal Income Tax and Economic Growth.
I. INTRODUCTION
The main objective of any developing country is to increase the rate of economic growth and per capital income which leads to a higher standard of living. Thus, taxation can be used as a stimulus to accelerate such growth in the Nigerian economy. Chigbuand Njoku (2015) asserts that the economic history of both developed and developing countries, reveals that taxation is a vital instrument of government that generates revenue, which also create fiscal goals that influence the direction of investment and taming the consumption and production of certain goods and services. Oriakhi (2014) supports that taxes are imposed to regulate the production of essential goods and services, protection of infant industries, control business and commerce, curb inflation, reduce income inequalities.
