Impact of Tax Administration on Economic Growth: Evidence from Nigeria

International Journal of Research and Innovation in Social Science (IJRISS) | Volume II, Issue VII, July 2018 | ISSN 2454-6186

Impact of Tax Administration on Economic Growth: Evidence from Nigeria

Olayinka Olalekan M.

 Pan Atlantic University, Lagos. Nigeria

Abstract:-The study examined the topic tiled, efficient and fair tax system for integration in the international economy: of what relevance to GDP? For a tax system that can compete favorably with other nations, then it must impact positively on the growth of GDP of that nation as it demonstrates its competitiveness. The impact of key components of taxation such as Personal Income Tax (PIT), Company Income Tax (CIT), Petroleum Profit Tax (PPT) and Value Added Tax (VAT) were measured on Gross Domestic Product (GDP).Secondary data for GDP was sourced from CBN Statistical Bulletin 2014 while secondary data for PIT, CIT, PPT and VAT were sourced from Federal Inland Revenue Service (FIRS). The data were analyzed using Ordinary Least Square (OLS) regression. The findings revealed that the variables in the model is significant at 5% critical level and the regression coefficient, that is R-squared represented by 0.955 implies that 95.5% of the total variation in GDP is caused by PIT, CIT, PPT and VAT while the remaining 4.5% may be due to other variables in the stochastic term. It is recommended that the Federal Government should ensure modern technologies both in hardware and software are made available to tax officials in order to make the process of tax computation, assessment, collection and remittance more economical, efficient and effective. Also, there should be transparency and accountability of tax revenues by the Government and tax officials for the benefit of the citizens and Nigeria as a whole. Training and re-training programs for tax officials is also important to keep them abreast of new tax laws and policies since they are the custodians of these laws and policies and lastly tax authorities should ensure that tax payers are well educated and enlightened on their civil responsibility of paying taxes.

Key words: Tax, GDP, Personal Income Tax, Petroleum Profit Tax, Value Added Tax

I. INTRODUCTION

For economies to thrive, cater and provide for the welfare and security of the citizens revenue generation system must be sustainable. Revenue generation from tax is globally acceptable as the most sustainable. No country can grow its economy successfully without sufficient resources to build its infrastructure. The situation in Nigeria up till now has been an over dependence on oil revenue to the detriment of other sectors, taxation inclusive. According to Ariyo (1997), Nigeria’s over reliance on oil revenue to the disadvantage of other sources of revenue was encouraged by the oil boom of 1973-1974. About 82% of Nigeria’s revenue accrued from oil exports (CBN 2009).

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