Effect of selected tax revenue on economic development in Nigeria

This study examined the effect of selected tax revenue on economic development in Nigeria for a period of 31years, 1993-2023. To achieve this objective, Real Gross Domestic Product (RGDP), served as the dependent variables for this study proxied for economic development, while company income tax (CIT), petroleum profit tax (PPT), personal income tax (PIT), value added tax (VAT), education tax (EDT) 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), the Federal Reserve Bank of St. Louis, 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 development indicators. The variables were normally distributed, and there was a causal relationship between tax revenue indicators and economic development. There exist a long-run relationship between tax revenue indicators and economic development. The Vector Autoregressive results show that tax revenue indicators were statistically significant with RGDP. The study concluded that tax revenue indicators had various levels of interaction with economic development indices 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 taxation is appropriately controlled in order to foster economic growth, minimize inflation, and boost employment in the nation. Keywords: Tax Revenue, Economic Development, Nigeria, Real GDP, Vector Autoregressive Model.