EVALUATING THE IMPACT OF TAX COMPONENTS ON ECONOMIC GROWTH IN NIGERIA. AN EMPIRICAL ANALYSIS.

Benjamin Anabori Mmadu, EDWARD ETA AKAKABOTA

Abstract


This paper examined the effect of different  tax components on economic growth in Nigeria. In contrast to existing studies, this study examines the relationship between the components of government Tax revenue (property tax, excess duty, Value added tax, company income tax) and  the growth rate of the economy  (GDP) with data spanning from 1981 to 2013. The data collected were analysed using relevant descriptive statistics and econometric models such as the Augmented Dickey Fuller test, Johansen test, and Granger Causality test. The results from the various test shows that tax reforms is positively and significantly related to economic growth and that tax components  granger cause economic growth. On the basis of the findings, the study concluded that tax reforms tax component improves the revenue generating machinery of government to undertake socially desirable expenditure that will translate to economic growth in real output and per capita basis. However, it was recommended that sustainable economic growth cannot be attained with tax reform processes except obsolete tax laws and rates are reviewed in line with macro economic objectives, corrupt-free and efficient tax administrative machinery with personnel’s and accountability and transparency of government officials in the management of tax revenue.

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ISSN : 2251-1555