Funding Infrastructure Through Taxation in Nigeria Linus, Justin Ogbonna

Infrastructure remains a critical determinant of sustainable development, and in Nigeria, the widening infrastructure deficit poses significant challenges to economic growth. This study investigates the role of taxation in bridging infrastructure deficits in Nigeria between 1999 and 2023. The general objective is to assess the effect of taxation on infrastructure deficit, with specific emphasis on the impact of value added tax (VAT), company income tax (CIT), and petroleum profit tax (PPT). The study identifies important research gaps in literature, including temporal, geographical, variable, and methodological limitations. Prior studies have relied on outdated datasets, non-Nigerian contexts, and narrow tax variables, while often depending on primary data. To address these gaps, this research adopts a broader temporal scope and utilizes secondary time series data obtained from the World Development Indicators and the Federal Inland Revenue Service. Employing an ex post facto research design and the Autoregressive Distributed Lag (ARDL) estimation method, the study rigorously analyzes the relationship between taxation and infrastructure deficit. Findings reveal that VAT has a negative and significant effect on infrastructure deficit (Coefficient = -0.40, p-value = 0.0012), while CIT and PPT exert positive and significant effects (Coefficient = 0.20, p-value = 0.0004; Coefficient = 0.02, p-value = 0.0000, respectively). The study concludes that efficient tax management is pivotal in addressing Nigeria’s infrastructure challenges and recommends policies to strengthen VAT allocation, incentivize corporate tax contributions, and channel petroleum tax revenues into infrastructure development. These insights provide relevant implications for fiscal policy and sustainable infrastructure financing in Nigeria.