The empirical results confirm that there is a negative relationship between taxes and economic growth in south africa. The study further looked at the relation between companies income tax cit, petroleum profit tax ppt and gross domestic product in the postifrs period. However, one means of generating the amount of revenue for providing the needed infrastructure is through a well. Even after some tax policies the tax authority has put in place over the few years such as the e payment scheme, tax identification number. Given that the purpose of introducing electronic tax system is to improve revenue collection which will in turn improve the countrys economic growth, the. By virtue of its size, improved economic management and strong economic growth in. We explore the linkages between availability of higher resource revenue and lower taxation effort of other revenue categories and the effects of these on growth. Yearly data for south africa for the period 1981 2016 was used to develop the autoregressive distribution lag ardl approach. The main objective of the study is to investigate the impact of taxation revenue on nigeria economic growth. The impact of taxation on economic growth in south africa. It was found that fiscal policy has not been effective. The impact of taxation is integrated into growth models by its impact on the individual growth variables, which are capital accumulation and investment, human.
The main objective of this research work is to assess taxation and revenue generation in nigeria. In simulations of economic growth models the effect of taxation on growth has frequently been demonstrated to be considerable. In this chapter, we examine the relationship between taxation and economic growth in a resource rich country, using nigeria as a case study. That is, the components or mechanism of taxation are together insignificant in impacting on economic growth in nigeria. For example, a declining informal sector widens the tax net, the growth of larger. A cointegration of value added tax and economic growth in. Pdf the dwindling price of crude oil has lowered the revenue generation to government thereby, impacting negatively on the nigeria economic growth. The ordinary least square method of multiple regression analysis was used to analyze the data. Request pdf on jan 1, 2016, adegbemi babatunde onakoya and others published taxation and economic growth in nigeria find, read and cite all the. The objective of this study is to investigate the impact of taxation on economic development of nigeria proxy by the gross domestic product gdp. The effect of tax compliance on economic growth and. The impact of taxation on nigeria economy growth projectclue.
Ordinary least square ols estimation technique is employed in estimating the specified model. The impact of taxation as an aid to economic development includes abstract and chapter one, complete project material available the impact of taxation as an aid to economic development in edo statea case study of oredo local government area, edo state, nigeria proposalthe research work will discuss in detail the impact of taxation as an aid to economic development in edo state. In these studies, researchers used economic development and economic growth interchangeably. A clear presumption exists that data on economic activity must reveal a strong correlation between taxation and growth. Taxation and economic growth 145 by which this can be achieved. All of these approaches achieve the same end that of sustained growth but by different routes. This study examines the impact of taxation on investment and economic growth in nigeria from 19802010. Chelliah 1989 observed that an increase in indirect taxation compared to direct taxation reduces economic growth more than direct taxation does. This work examined the nature of tax system, benefits of tax revenue and mechanism that can be adopted to properly harness the revenue from taxation in nigeria. The objective of this study was to examine the significant difference between the effects of oil and non oil tax revenue on economic growth in nigeria.
The effect of tax revenue on economic growth and development. Impact of multiple taxation on africa trade policy notes. This is because tax revenue is an important instrument for economic growth and development in many developing economies like nigeria, since the internal revenue generated. This makes the administration of taxes in terms of coverage and assessment very weak.
We consider the impact of a major tax reform on the longterm growth rates of the u. Taxation and economic growth in nigeria ideasrepec. Impact of taxation revenue on economic growth of nigeria. Personal income tax pit and economic growth in nigeria.
Mar 27, 2016 for taxation to make the desired impact on the economic development of nigeria as the major source of government revenue. The general objective of this study is to examine the impacts of value added tax on revenue generation in nigeria. This paper investigates the impact of taxation on economic growth in south africa. In this study, we empirically test the impact of taxation on the longterm growth of a sample of 32 countries in subsaharan africa. This work evaluates the effect of tax avoidance and tax evasion on economic growth and development in nigeria 20062016. The study adopted a descriptive and historical research. Taxation as an instrument of economic growth the nigerian. The broad objective of this study is to examine the effect of taxation on economic growth of nigeria. The impact of tax policy on economic growth in nigeria.
The impact of tax revenue on economic growth iosr journal. The result also, revealed a significant positive relationship at 5% level of significance between petroleum profit tax, company income tax and economic growth, but a negative relationship between economic growth and customs and excise duties. Taxation and economic growth in nigeria semantic scholar. Data collected through secondary sources and then will be analysed and tested for unit roots using the augmented dickeyfuller test. The need for tax payments has been a phenomenon of global significance as it affects every economy irrespective of national differences oboh and isa, 2012. Government imposes levies on individuals, companies, organisations in the form of tax so government machinery. Tax compliance here is proxied in willingness of the citizens to pay tax. The aim of this paper is to evaluate the impact of individual types of taxes on the economic growth by utilizing regression analysis on the oecd countries for the period of 20002011. Based on the differences in opinions and empirical findings, it is therefore necessary to investigate the impact of tax revenue on economic growth in nigeria from 1980 to 2015. Given that the purpose of introducing electronic tax system is to improve revenue collection which will in turn improve the countrys economic growth, the study empirically examined how the implementation of etaxation in 2015 has affected tax revenue, federally collected revenue and taxtogdp ratio. Several arguments have trailed the relevance of taxation resources as a tool for enhancing infrastructural development in nigeria, some scholars submit that the quantum of tax resources.
The simplest method, called the ak model, is to assume that capital is the only input into production and. The results suggest that the growthmaximizing tax rate is about 15% of per capita gdp for south africa and 30% for nigeria. At that tax rate, the economic growth rate would be around 6% and 8%. World bank and pwc 2015 3 paying taxes survey in 2005 revealed that taxpayers are able to file tax returns electronically in about 45% of the countries. Ordinary least square ols estimation technique is employed in estimating the specified. The standard economic approach to taxation and development focuses on how economic change in. The effect of taxation on nigeria economy project topics. Arising from this, the study investigated the cointegration relationship between tax revenue and economic growth in nigeria from 1980 to 20. A study on the effect of tax revenue on economic growth and development in nigeria is justified based on the need for the various level of government in nigeria to ensure continuous economic growth and development through the utilization of tax revenue from various taxes ranging from petroleum profit tax, company income tax, custom and excise. At this stage, however, there is little agreement about federal reserve board, washington.
According to nzotta 2007, four key issues must be understood for taxation to play its functions in the society. A lot of literature exists on tax revenue and economic growth of nigeria adereti et al. By virtue of its size, improved economic management and strong economic growth in nigeria would generate. Problem nigeria is said to be deficient in human capital and infrastructure and as a developing economy, one of the defining features of its growth would be underpinned by the improvement of human capital and massive development of physical infrastructure. This paper examines taxation as an instrument of economic growth in nigeria. Based on the differences in opinions and empirical findings, it is therefore necessary to investigate the impact of tax. Economic growth is the growth of an economys output of goods and services which is. Correction result revealed that company income tax and customs and excise duties have positive and significant relationship with economic growth in nigeria.
Working papers from the economics department of the oecd that cover the full range of the departments work including the economic situation, policy analysis and projections. Given that the purpose of introducing electronic tax system is to improve revenue collection which will in turn improve the countrys economic growth, the study empirically examined how the implementation of e taxation in 2015 has affected tax revenue, federally collected revenue and tax togdp ratio. In the same vein, olawunmi and ayinla 2007 examined the contribution of fiscal policy in the achievement of sustainable economic growth in nigeria using slow growth model estimated with the use of ordinary least square ols method. This act regulates the personal income tax throughout the federation. Journal of accounting and taxation full length research paper evaluating the impact of value added tax on the economic growth of nigeria nasiru mukhtar gatawa1, haruna mohammed aliero1 and abdullahi muhammad aishatu2 1department of economics, usmanu danfodiyo university, sokoto, nigeria. The dwindling price of crude oil has lowered the revenue generation to government thereby, impacting negatively on the nigeria economic growth.
The relationship between indirect taxation and economic growth has been examined severally by different researchers. International journal of humanities, art and social studies ijhas, vol. Pdf pthe study examined the relationship between tax revenue and economic growth in nigeria. Tax reforms are sometimes touted to have strong macroeconomic growth effects.
May 02, 2015 the study examined the effect of tax compliance on economic growth and development in nigeria. Jan 29, 2015 the aim of this paper is to evaluate the impact of individual types of taxes on the economic growth by utilizing regression analysis on the oecd countries for the period of 20002011. Ofurum et al impact of etaxation on nigerias revenue and economic growth. Taxation plays a very important role in the economic life of a developing country like nigeria. The study examined the effect of tax compliance on economic growth and development in nigeria. The need for tax payments has been a phenomenon of global significance as it affects every economy irrespective of national differences oboh and. The impact of taxation on investment and economic development. This study using time series data within 34 years starting from 1981 to 2014. Modelling growth, taxation and investment incentives 116 tax and growth modelling. Ani 1, mohammed inuwa dauda 2 and mamman andekujwo baajon 3 nb. Using annual time series data sourced from the central bank of nigeria cbn statistical bulletin during the period 1980 through 20, a linear model of corporate income tax cit, value added tax vat and economic growth gdp was.
The simplest method, called the ak model, is to assume that capital is the only input into production and that there are constant returns to scale. Relevance of tax revenue resources to infrastructural. It aimed to give a detailed examination of the effect of tax avoidance on the economic growth and development in nigeria. First, a tax is a compulsory contribution made by the citizens to the government and this contribution is for a general common use. Economic development encompasses policies that governments undertake to meet broad economic objectives such as price stability, high employment, expanded tax base, and sustainable growth. Impact of etaxation on nigerias revenue and economic. To examine the relationship between value added tax and revenue generation in nigeria to establish the effects of value added tax on revenue generation in nigeria 1. The taxation revenue on nigeria economic growth comes to lime light considering the incidence of overdependent on oil revenue in nigeria. Today, nigeria is indeed in dire need of effective and efficient tax system in order to generate enough revenue that will stimulate economic growth and development oji, 2000.
This study examined the impact of e taxation on nigeria s revenue and economic growth. One of the major functions of the government especially developing countries such as nigeria is the provision of infrastructural services such as electricity, schools, hospitals, pipeborne water, good roads and as well as ensure a rise in percapital income, poverty alleviation to mention a few. Impact of etaxation on nigerias revenue and economic growth. Taxation and economic growth in nigeria request pdf. This necessitates the essence of the study on the effect of taxation on economic growth of nigeria. As africas most populous country, nigeria boasts of the continents second largest oil reserves and has a very promising growth outlook.
Impact of multipletaxation on competitiveness in nigeria nihal pitigala and mombert hoppe march 2011 introduction nigeria is africas most populous country and second largest economy after south africa. Pdf tax revenue and economic growth in nigeria researchgate. Taxation and economic growth in nigeria research and scientific. The role of taxation in promoting economic growth in nigeria is not fully felt, and optimal tax is not been realized that can engine economic growth primarily because of its poor administration.
Broadly, the study focused on tax revenue and economic growth in nigeria. Some researchers estimated the effect of tax revenue on the economic development of nigeria using gross domestic product gdp. The impact of taxation as an aid to economic development includes abstract and chapter one, complete project material available the impact of taxation as an aid to economic development in edo statea case study of oredo local government area, edo state, nigeriaproposalthe research work will discuss in detail the impact of taxation as an aid to. The annual data were sourced from the central bank of nigeria statistical bulletin and nbs. To this end, the government opted for other alternative source of growing her economy through taxation. This study was designed to investigate the tax revenue and nigerian economic growth for period of three decade, using time series data from 1986 to 2015. It is not farfetched that taxation has a positive role, and is an engine to the economic growth of nigeria. The significant issues that must be considered to determine and understand the diverse effects of taxation in the goal and objective of achieving a diversified economic growth and development with stability in all sectors of the economy of nigeria includes.
Few, ifany have examined this line of research in nigeria. Evaluating the impact of value added tax on the economic. Tax, vat, economic growth, cointegration, nigeria introduction taxation is a major player in every economy of the world. Ibadin 2015 makes a study to examined indirect taxes and economic growth in nigeria. This study examined the impact of etaxation on nigerias revenue and economic growth. What taxation can and cannot do by taiwo oyedele a bill seeking to amend the companies income tax act cap c21 lfn 2004 to, among other things, make provisions for tax incentives for economic growth and creation of employment opportunities is currently under consideration by the national assembly. Taxation and economic growth in a resourcerich country. Similar finding which indicate that low income tax rates boosted the economic growth was reported by bonu and pedro 2009 who utilized descriptive technique in botswana. Therefore, taxation plays a major role in assisting a country to meet its needs and promote selfreliance.
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