ABSTRACT

The contribution of taxation to any economy globally cannot be overemphasized. Apart from the revenue function it performs for the government, it is also used to assist the national government to achieve the country’s macro-economic objectives in the areas of fiscal and monetary policies. Over the years, it has been observed that a substantial part of revenue generated in Nigeria is from taxes, yet the role of taxation in promoting economic activities and growth is not felt, mainly because of feasible evidences which cannot be seen nor perceived by the citizens in terms of infrastructure and basic amenities. Past documentations have revealed that revenue from taxes in developed nations have high impact on its economic growth which clearly seen by the amenities provided by such nations. Time series data were applied in carrying out this research work. Multiple Linear Regression analysis was used to analyze the data by employing the use of Vector Error Correction Model. The findings reveal that petroleum profit tax, company income tax and value added tax have a positive impact on Nigeria’s economic growth while custom excise and duties impacted negatively but overall, a significant relationship between tax revenue and the Nigerian economic growth exists. The utilization of the generated revenue from taxes calls for serious concern, and requires a special attention of policy makers, non-compliance with tax laws on the part of the tax payers is a hindrance and ineffective administration of tax has given enough loop holes for tax evasion, the consequence of which is poor revenue.

Keywords: Government Expenditure, Economic growth, Government Revenue, Taxation and Economy.

TABLE OF CONTENTS

Title Page 

Certification I

Dedication II

Acknowledgements III

Abstract IV

Table of Contents V

CHAPTER ONE: INTRODUCTION 

1.1 Background to the Study 1

1.2 Statement of the Research Problem 3

1.3 Aim & Objectives of the Study 4

1.4 Relevant Research Questions 4

1.5 Relevant Research Hypotheses 4

1.6 Significance of the Study 5

1.7 Scope of the Study 5

1.8 Definition of Terms 5

References 8

CHAPTER TWO: LITERATURE REVIEW

2.1 Preamble 10

2.2 Theoretical Framework of the Study 10

2.2.1 Ability to Pay Theory 10

2.2.2 Concentration Theory 11

2.2.3 The Diffusion Theory 12

2.2.4 Benefit Theory 13

2.3 Empirical Review 13

2.3.1 The Principles of Taxation 18

2.3.2 Objectives of Taxation 19

2.3.3 Taxation as a Tool for Wealth Creation and Employment 22 

2.3.4 Problems of Tax Administration in Nigeria 23

2.3.5 Tax Avoidance and Tax Evasion Practices 24

2.3.6 The Nigerian Tax Structure 25

References 29

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Preamble 33

3.2 Theoretical Framework  33

3.3 Model Specification 33

3.4 Description and Measurement of Variables 34

3.5 Technique of Data Analysis 35

3.6 Types and Sources of Data 35

3.7 Method of Data Analysis 35

3.8 Limitation of the Methodology 35

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1 Preamble 37

4.2 Econometrics Properties of Data 37

4.3 Descriptive Analysis 41

4.4 Test of Hypothesis 43

4.5 Discussion of Finding 45

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Summary 46

5.2 Conclusion 47

5.3 Recommendations 48

Bibliography