EFFECTS OF TAXATION ON ECONOMIC GROWTH IN NIGERIA

Hafsat Olatanwa AFOLABI

Abstract

Taxation is an important strategy by government in promoting economic growth and development of a nation. However, the economy of Nigeria has continued to lose huge amount of revenue through the unwholesome practice of tax avoidance and tax evasion. It is against this challenges that this study examined the effect of taxation on economic growth in Nigeria. Specifically, this study examined the impact of value added tax on economic growth in Nigeria as well as examined the effect of petroleum profit tax on economic growth in Nigeria.Finally, the study examined impact of companies’ income tax on the growth of Nigerian economy.Secondary data was obtained from the Central Bank of Nigeria statistical bulletin. Canonical cointegrating regression was used to achieve the objectives of the study. Results of the regression analysis revealed a positive relationship between taxationand economic growth in Nigeria. The study concluded that taxation is a significant determinant of economic growth in Nigeria. The study therefore, recommends that government should enact policies (such as the maximum time for collection of all taxes) so to ensure adequate collections of taxation and Government should embarked on massive awareness and sensitization on the importance of taxation to the populace.

Full Text:

PDF