IMPACT OF INCOME TAX ON ECONOMIC GROWTH OF NIGERIA
Umar Salim Ibrahim ,Babagana Abba ,Abubakar Musa ,Fatihu shehu Isa ,Fatima Mustapha Gana ,Muhammad S. Abdulwahab and Najib Sani
Volume 4 Issue 2
Abstract
The study evaluate the effect of income tax on economic growth of Nigerian economy for the period of 1994 to 2020, using annual time series data from the Federal board of internal revenue and central bank statistical bulletins and National Bureau of Statistics (NBS). The study investigates the impact of four tax revenue sources, which include; Petroleum Profit Tax, Company Income Tax, Value Added Tax and Personal Income Tax on the economic growth as measured by GDP (at basic current prices) economic growth from 1994 to 2020. To fulfill the objectives of the study's, ARDL and ECM techniques were used to determine the relationships, dynamics, and long-run relationship between the dependent variables and independent variables. At the 5% significance level, the ARDL/bounds co-integration test demonstrated that the null hypothesis should be rejected. The study discovered that income tax had a positive and statistically significant relationship with economic growth in Nigeria during the study period. The study recommends that the federal government manage the financial resources earned by income taxes responsibly and severely decrease waste of expenditures. Furthermore, the government ought to make sure that all tax exemptions are eliminated, and corporate tax evasion and avoidance ought to be thoroughly examined and penalized. Finally, in order to have a transparent tax system for better welfare and economic development, the government ought to exhibit more accountability in its handling and use of income tax revenue. Keywords: Growth Domestic Product, Petroleum Profit Tax, Company Income Tax, Value Added Tax, Personal
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