THE ROLE OF OPTIMAL TAX THEORY IN ENHANCING CUSTOMS REVENUE AND BORDER SECURITY IN NIGERIA
Olusegun Olutayo Cyrus, Andrew E. Zamani, PhD and Usman David
Volume 5 Issue 2
Abstract
This study investigates the role of Optimal Tax Theory (OTT) in enhancing customs revenue and border security in Nigeria. Despite significant revenue growth, challenges such as persistent smuggling, corruption, and poor infrastructure hinder optimal customs performance. OTT provides a framework for designing tax systems that maximize revenue through balanced, differentiated tariffs based on goods’ demand elasticity, promoting equity and efficiency. The population includes Nigeria Customs Service officials, business stakeholders, and policymakers. Using qualitative documentary analysis, the study examined customs records, policy documents, and annual reports from 2022 to 2025 to assess tariff structures and enforcement. Findings show that NCS surpassed revenue targets with reforms aligned to OTT, including digital modernization and inter-agency cooperation. However, issues like porous borders and institutional weaknesses persist. The study concludes that OTT offers valuable guidance but requires complementary institutional reforms and technological investments. Recommendations focus on strengthening anti-corruption, adopting advanced surveillance technologies, enhancing cooperation, simplifying tariffs, and investing in capacity building to improve customs efficiency, border security, and revenue mobilization crucial for Nigeria’s economic development and national security. Keywords: Optimal Tax Theory, Customs Revenue, Border Security, Nigeria Customs Service, Tax Reform and Compliance
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