Effect of indirect tax revenue on Nigeria economy

This study examined the effect of indirect tax revenue on Nigeria economy for a period of 29years, 1995-2023. To achieve this objective, Real Gross Domestic Product (RGDP), served as the dependent variables for this study proxy for economic growth, while value added tax (VAT), import duties (IMPD) and customs and excise duties (CED) served as the independent variables (explanatory variables). Ex-post-facto research design was utilized for this study. Data used were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin, Central Bank of Nigeria Economic and Annual Report Account, Federal Inland Revenue Service (FIRS), and the World Bank Database. Descriptive statistics, Phillips-Perron (PPT) Unit root test, Johansen Co-integration, Granger causality and Vector Autoregressive model (VAR) were the analytical tools for this study. The results revealed that some variables of tax revenue indicators have significant effect; while others have no significant effect on economic growth indicator. The variables were normally distributed, and there was a causal relationship between indirect tax revenue indicators and economic growth. There exist a long-run relationship between indirect tax revenue indicators and economic growth. The Vector Autoregressive results show that indirect tax revenue indicators were statistically significant with RGDP. The study concluded that indirect tax revenue indicators had various levels of interaction with economic growth index measured in this study with greater outcome indicating positive and significant effect. The policy implication is that country should apply stringent financial controls to limit income leakage in the system. The study recommended that government should ensure that tax revenue should be spent wisely to fund essential services. This would encourage the growth of numerous economic sectors, hence boosting economic growth. Keywords: Indirect Tax Revenue, Economic Growth, Real Gross Domestic Product, Value Added Tax, Import Duties, Custom And Excise Duties.