Impact of Tax Reforms on Economic Growth of Nigeria (2000-2021)

https://doi.org/10.35912/gaar.v1i1.1506
Published: Dec 2, 2022

Abstract:

Purpose: The objective of this study was to investigate the impact of tax reforms on economic growth of Nigeria.

Methodology: This study adopted time series strategy basically concerned with how to perform impact analysis on already existing data. Secondary data were used in this study. However, relevant data for the study were obtained from Central Bank of Nigeria (CBN) Statistical Bulletins, Federal Inland Revenue Services Bulletins, and the World Bank, using judgmental sampling technique, a sample of 21 years’ period from 2000 to 2021. Regression analysis technique was used to measure the effects of the predictor variables on the criterion variables. This study used estimated technique of both descriptive statistics and Ordinary least square (OLS) regression analysis method with the help of Statistical Package for Social Sciences (SPSS 25).

Results: The researcher revealed that there is a positive significant impact of VAT, CIT, & PPT on RGDP in Nigeria among other things. Therefore, the researcher established that there is a significant positive impact of tax reforms on Nigeria’s economic growth.

Contribution: The study's researcher suggested that policymakers should focus on boosting the productive capacity of the economy by reforming the tax code to prioritize economic growth and opportunity, government should expand the tax yield through improved tax administration system. This is because of the danger of over-reliance on crude oil export receipts to drive the economy among other things.

Limitations: One of the limitations encountered in this study is that the chosen sample size was limited to one economy in Africa which is Nigeria.

Keywords:
1. Tax Reforms
2. Economic Growth
3. Value Added Tax
4. Real Gross Domestic Product
Authors:
1 . Odukwu Victory Chika
2 . Daniel Oshiogwemoh
3 . Eke Promise
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How to Cite
Chika, O. V. ., Oshiogwemoh, D. ., & Promise, E. . (2022). Impact of Tax Reforms on Economic Growth of Nigeria (2000-2021). Goodwood Akuntansi Dan Auditing Reviu, 1(1), 79–95. https://doi.org/10.35912/gaar.v1i1.1506
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Vol. 1 No. 1 (2022): November
Articles
References

    Abomaye, N., Williams, A. S., Michael, J. E. M., & Friday, H. C. (2018). An empirical analysis of tax revenue and economic growth in Nigeria from 1980 to 2015. Global Journal of Humanities, Social and Political Sciences, 18, 8–40.

    Abuh, A. & Jeremiah, J. O. O. (2022). Reviewing tax collection in the electronic tax regime in Nigeria. Journal of Contemporary Issues in Accounting (JOCIA), 3(1), 217-230.

    Adegbie, F. F., Enerson, J., & Olaoye, S, A. (2022). An empirical investigation into the relationship between electronic tax management system and tax revenue collection efficiency in selected states in south west, Nigeria. International Journal of Accounting Research (IJAR), 7(1), 43-53.

    Afridi, A. H. (2016). Human capital and economic growth of Pakistan. Business & Economic Review, 8(1), 77-86.

    Agbo, F. J., Olawumi, O., Oyelere, S. S., Kolog, E. A., Olaleye, S. A., Agjei, R. O., ... & Olawuni, A. (2020). Social media usage for computing education: The effect of tie strength and group communication on perceived learning outcome. International Journal of Education and Development using Information and Communication Technology, 16(1), 5-26.

    Akitoby, B. (2018). Raising revenue. Finance & Development, 55(1), 169-177.

    Asaolu, T. O., Olabisi, J., Akinbode, S. O., & Alebiosu, O. N. (2018). Tax revenue and economic growth in Nigeria. Scholedge International Journal of Management & Development, 05(07), 72-85.

    Ayodeji, O. E. (2014). Impact of ICT on tax administration in Nigeria computer engineering and intelligent systems, 5(8), 26-29.

    Bachama, Y. N., Hassan, A. A., & Ibrahim, B. (2021). The impact of human capital on Nigeria’s economic growth. European Scientific Journal ESJ, 17(15). doi.org/10.19044/esj.2021.v17n15p393.

    Bassey, E., & Amobi, B, N. (2022). Choice of location for foreign direct investment by multinational corporations: Does tax burden matter?. International Journal of Financial, Accounting, and Management, 3(4), 349-358.

    Bird, R. M. (2015) Improving tax administration in developing countries. Journal of Tax Administration, 1(1), 23-44.

    Desislava, S. (2017). Tax structure and economic growth: Evidence from the European Union. Contaduria Y Administracion, 62(3), 1041-1057.

    Emeneka, O. L. (2021). Effect of tax reforms on economic growth of Nigeria. International Journal of Advanced Academic Research, 7(9), 26-39.

    Eze, S. O. (2020). Empirical evidence of a long-run relationship between agriculture and manufacturing industry output in Nigeria. https://journals.sagepub.com/doi/full/10.1177/2158244019899045. Retrieved 11/02/2020.

    Ezejiofor, R. A., Oranefo, P. & Ndum, N. B. (2021). Tax revenue on per capita income: Evidence from Nigerian economy. American Journal of Contemporary Management Research, 11-16.

    Fjeldstad, O.H. (2014). Tax and development: Donor support to strengthen tax systems in developing countries. Public Administration and Development, 34(3), 181-192.

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    Gbeke, K. K. & Nkak, P. E. (2021). Tax reforms and economic growth of Nigeria. IOSR Journal of Business and Management (IOSR-JBM), 23(06), 16-23.

    Hartanto, S. (2020). Addressing the tax challenges of e-commerce transactions. International Journal of Financial, Accounting, and Management, 2(1), 29-39.

    Herbert, W. E., Nwaorgu, I. A. & Nwaiwu, J. (2017). The tenuous relationship between oil revenue and Nigeria’s economic growth. European Journal of Accounting Auditing and Finance Research, 5(6), 51-76.

    Ironkwe, U. I., & Agu, E. O. (2019). Tax revenue and economic development in Nigeria. International Journal of Advanced Academic Research, 5(4), 1-15.

    Jibir, A., & Musa, A. (2016). Causal links between foreign capital inflows and economic growth: Empirical evidence from Nigeria. International Journal of Accounting & Business Finance, 2(1), 45-56.

    Jibir, A., Abdullahi, S., Abdu, M., Buba, A., & Ibrahim, B. (2018). External debt-growth nexus in Nigeria revisited. Asian Economic and Financial Review, 8(1), 117-130.

    Khadijat, A. Y. & Taophic, O. B. (2018). Effect of petroleum profit tax and companies income tax on economic growth in Nigeria. Journal of Public Administration, Finance and Law, 9, 100-121.

    Matousek, R., & Tzeremes, N. G. (2019). The asymmetric impact of human capital on economic growth. Empirical Economics, 1-26.

    Neway, G., Kenenisa, L. D., & Woldemicael, S. (2018). Determinants of tax revenue in Ethiopia. Economics, 6(1), 58-64.

    Ogundari, K., & Awokuse, T. (2018). Human capital contribution to economic growth in Sub-Saharan Africa: does health status matter more than education?. Economic Analysis and Policy, 58, 131-140.

    Okeke, M. N., Mbonu, C. M., & Amahalu, N. N. (2018). Tax revenue and economic development in Nigeria: A disaggregated analysis. International Journal of Academic Research in Accounting, Finance and Management Sciences, 8(2), 178- 199.

  1. Abomaye, N., Williams, A. S., Michael, J. E. M., & Friday, H. C. (2018). An empirical analysis of tax revenue and economic growth in Nigeria from 1980 to 2015. Global Journal of Humanities, Social and Political Sciences, 18, 8–40.
  2. Abuh, A. & Jeremiah, J. O. O. (2022). Reviewing tax collection in the electronic tax regime in Nigeria. Journal of Contemporary Issues in Accounting (JOCIA), 3(1), 217-230.
  3. Adegbie, F. F., Enerson, J., & Olaoye, S, A. (2022). An empirical investigation into the relationship between electronic tax management system and tax revenue collection efficiency in selected states in south west, Nigeria. International Journal of Accounting Research (IJAR), 7(1), 43-53.
  4. Afridi, A. H. (2016). Human capital and economic growth of Pakistan. Business & Economic Review, 8(1), 77-86.
  5. Agbo, F. J., Olawumi, O., Oyelere, S. S., Kolog, E. A., Olaleye, S. A., Agjei, R. O., ... & Olawuni, A. (2020). Social media usage for computing education: The effect of tie strength and group communication on perceived learning outcome. International Journal of Education and Development using Information and Communication Technology, 16(1), 5-26.
  6. Akitoby, B. (2018). Raising revenue. Finance & Development, 55(1), 169-177.
  7. Asaolu, T. O., Olabisi, J., Akinbode, S. O., & Alebiosu, O. N. (2018). Tax revenue and economic growth in Nigeria. Scholedge International Journal of Management & Development, 05(07), 72-85.
  8. Ayodeji, O. E. (2014). Impact of ICT on tax administration in Nigeria computer engineering and intelligent systems, 5(8), 26-29.
  9. Bachama, Y. N., Hassan, A. A., & Ibrahim, B. (2021). The impact of human capital on Nigeria’s economic growth. European Scientific Journal ESJ, 17(15). doi.org/10.19044/esj.2021.v17n15p393.
  10. Bassey, E., & Amobi, B, N. (2022). Choice of location for foreign direct investment by multinational corporations: Does tax burden matter?. International Journal of Financial, Accounting, and Management, 3(4), 349-358.
  11. Bird, R. M. (2015) Improving tax administration in developing countries. Journal of Tax Administration, 1(1), 23-44.
  12. Desislava, S. (2017). Tax structure and economic growth: Evidence from the European Union. Contaduria Y Administracion, 62(3), 1041-1057.
  13. Emeneka, O. L. (2021). Effect of tax reforms on economic growth of Nigeria. International Journal of Advanced Academic Research, 7(9), 26-39.
  14. Eze, S. O. (2020). Empirical evidence of a long-run relationship between agriculture and manufacturing industry output in Nigeria. https://journals.sagepub.com/doi/full/10.1177/2158244019899045. Retrieved 11/02/2020.
  15. Ezejiofor, R. A., Oranefo, P. & Ndum, N. B. (2021). Tax revenue on per capita income: Evidence from Nigerian economy. American Journal of Contemporary Management Research, 11-16.
  16. Fjeldstad, O.H. (2014). Tax and development: Donor support to strengthen tax systems in developing countries. Public Administration and Development, 34(3), 181-192.
  17. Gaspar, V., & Abebe, A. S. (2017). Taxes, debt and development: A one-percent rule to raise revenues in Africa.” IMF blog. https://blogs.imf.org/2017/12/05/taxes-debt-anddevelopment-a-one-percent-rule-to-raise-revenues-in-africa.
  18. Gbeke, K. K. & Nkak, P. E. (2021). Tax reforms and economic growth of Nigeria. IOSR Journal of Business and Management (IOSR-JBM), 23(06), 16-23.
  19. Hartanto, S. (2020). Addressing the tax challenges of e-commerce transactions. International Journal of Financial, Accounting, and Management, 2(1), 29-39.
  20. Herbert, W. E., Nwaorgu, I. A. & Nwaiwu, J. (2017). The tenuous relationship between oil revenue and Nigeria’s economic growth. European Journal of Accounting Auditing and Finance Research, 5(6), 51-76.
  21. Ironkwe, U. I., & Agu, E. O. (2019). Tax revenue and economic development in Nigeria. International Journal of Advanced Academic Research, 5(4), 1-15.
  22. Jibir, A., & Musa, A. (2016). Causal links between foreign capital inflows and economic growth: Empirical evidence from Nigeria. International Journal of Accounting & Business Finance, 2(1), 45-56.
  23. Jibir, A., Abdullahi, S., Abdu, M., Buba, A., & Ibrahim, B. (2018). External debt-growth nexus in Nigeria revisited. Asian Economic and Financial Review, 8(1), 117-130.
  24. Khadijat, A. Y. & Taophic, O. B. (2018). Effect of petroleum profit tax and companies income tax on economic growth in Nigeria. Journal of Public Administration, Finance and Law, 9, 100-121.
  25. Matousek, R., & Tzeremes, N. G. (2019). The asymmetric impact of human capital on economic growth. Empirical Economics, 1-26.
  26. Neway, G., Kenenisa, L. D., & Woldemicael, S. (2018). Determinants of tax revenue in Ethiopia. Economics, 6(1), 58-64.
  27. Ogundari, K., & Awokuse, T. (2018). Human capital contribution to economic growth in Sub-Saharan Africa: does health status matter more than education?. Economic Analysis and Policy, 58, 131-140.
  28. Okeke, M. N., Mbonu, C. M., & Amahalu, N. N. (2018). Tax revenue and economic development in Nigeria: A disaggregated analysis. International Journal of Academic Research in Accounting, Finance and Management Sciences, 8(2), 178- 199.