Taxation as a Stimulus for Economic Growth in Nigeria

Adigwe, Pretty Dennis, Oyadonghan Kereotu James


This study examined taxation as a stimulus for economic growth and development in Nigeria. The problem of over dependence in oil income has marred the nation sustainable development, several scholars and agencies are clamouring for revenue diversification for the economy. Since technological growth is a long way to achieve in the economy, tax could be considered as an immediate option to the problem. Tax is a major source of government revenue all over the world and Nigeria is not an exception. The tax system is an opportunity for the government to assemble extra revenue needed in discharging economic development and creating a conducive business environment for its citizens. This study used yearly time series data from the Central Bank of Nigeria (CBN) Statistical Bulletin for the period of 2009 to 2018 and a linear model of Corporate Income Tax (CIT), Value Added Tax (VAT) and Economic Growth (GDP) was appraised using the Ordinary Least Square (OLS) technique. The results gotten from this study revealed that the hypothesized connection among corporate income tax, value added tax and economic growth really exist in Nigeria. Thus the result gives the confirmation that taxation is indeed a stimulus for economic growth and development in Nigeria. This conclusion has revealed the need for government to institute extra methods or processes that will make taxpayers not to avoid and evade tax so that revenue can be properly generated, and income effectively redistributed and allocated in the economy.

Keywords: Taxation, Economic growth, Development, Gross Domestic Product

DOI: 10.7176/RJFA/11-2-07

Publication date: January 31st 2020

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