Statistical Analysis of the impact of Tax Revenue on the Economic Growth of Nigeria

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Abstract

The study investigates the impact of tax revenue on the economic growth of Nigeria. The data for this study is secondary data obtained from the central bank of Nigeria (CBN) and is based on annual series from the period 2012 – 2020. The relationships are derived using multiple linear regression techniques. The data satisfied the assumptions of the multiple linear regression model. From our model, a unit increase in PPT result in a 3.3450 decrease in GDP, a unit increase in CIT increases GDP by 7.0752, a unit increase in VAT increases GDP by 82.1315 and a unit increase in CED increases GDP by 66.1242. The relationship between Petroleum Profit Tax (PPT) and Gross domestic product that proxied economic growth showed a negative impact. Petroleum Profit Tax (PPT), Company Income Tax (CIT), Value Added Tax (VAT), and Custom and Excised Duty (CED) have a positive effect on the economy. The result shows that R2 is equal to 0.934 which is 93% of the dependent variable (GDP) is explained by the independent variables (PPT, CIT, VAT, and CED) within the period under review. The F – statistics of 108.7 shows the overall significance of the model with a p-value less than 0.05. The test of stationarity using Augmented Dickey-Fuller (ADF) showed that all the variables were integrated into order one. The test of cointegration showed one variable vector which confirmed the existence of a long-run relationship among all the variables. To generate reasonable revenue and sustain economic growth this work suggests less attention to Petroleum Profit Tax and focus on other forms of tax revenue.

Keywords: Economic growth;Tax revenue; Petroleum Profit Tax; Company Income Tax;,,,,

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