Effect of Diverse Tax Revenues and Effective Government on Economic Growth in Nigeria

Abstract

The present study explores the effect of different tax revenues in Nigeria, namely Petroleum profit tax, Value added tax, customs and excise duties, and company income tax, on Nigeria’s economic growth taking into account the role of Government effectiveness using time series data from 1994 to 2015 Ordinary least squares regression employed in data analysis revealed that while Petroleum profit tax had a negative and statistically significant effect on economic growth, Value Added Tax and Customs and Excise duties had a positive and statistically significant effect on economic growth in Nigeria. To the contrary, Company income tax was positive but insignificant for Economic growth in Nigeria. Further in the presence of improved government effectiveness Value added tax had a negative and statistically significant effect on economic growth in Nigeria, while Petroleum Profit tax was positive but insignificant for economic growth in Nigeria. The study recommends that the Nigeria government through the Nigeria tax authorities should take into consideration, existing market conditions as regards oil prices so that Petroleum exploring firms are not discouraged from undertaking oil exploiting activities in Nigeria, Value Added Tax revenue and Customs and Excise Duties tax revenue should be used to finance provision of adequate infrastructure