Empirical Analysis of Vertical Imbalance of Revenue Distribution in Nigeria between: 1985-2010.

Abstract

In contemporary society, the surviving economy depends on the volume of tax response of her citizenry as it helps in frastructural development which in turns contributes to economic development in the country. Against this background, the paper examined the empirical analysis of vertical imbalance of revenue distribution in Nigeria between the periods of 1985 to 2010. Data sourced from the CBN and NBS Statistical Bulletin were subjected to empirical analysis and result showed that the findings confirmed an evidence of negative and inversely relationship between VIMBs and UNED while VIMBf  indicated direct and positive relationship with UNED in Nigeria. This is suggestively true because federal has very wide coverage of revenue generation than the state government. In term of predicative capability of cases within the years of study, the state can predict 84 percent 21 out of 25 cases while the federal predict only 80 percent 20 out of 25 cases of UNED. However, VIMBs is not statistically significance while VIMBf is significant based in the overall parameter comparison with the UNED. Although both VIMBs and VIMBf are respectively significance in terms of the model estimates result. The VIMBf is fund to have the highest strength of explaining the variation in UNED by 7.7 percent than the VIMBs of only 1.7 per cent.  It is therefore wise to recommended that effort should be made by the National Economic Commission, National Planning Commission and Policy Makers to regulate and restructure the Federal character commission policy of development to reflect true implementation and federalism in governance.

Keywords: Vertical Imbalance, Revenue, Gretl, Policy, Uneven Development, Dummy variables.