Investigating the Impact of Taxation Revenue Management and Its Implications on the Sustainability of Nigerian Economic Growth

R. T. Temerigha¹, J. Iworiso^2, and B. Idiko³

¹Department of Accounting, Finance & Economics, Bournemouth University

²School of Computing & Digital Media, London Metropolitan University

³Business Administration & Human Resource Management, University of Bedfordshire

Cite this paper:
R. T. Temerigha, J. Iworiso and B. Idiko. Investigating the Impact of Taxation Revenue Management and Its Implications on the Sustainability of Nigerian Economic Growth. International Journal of Business and Risk Management. 2021; 4(1):25-41. doi: 10.12691/ijbrm-4-1-4

Abstract

This paper examines the significance and contributions of taxation revenue in stimulating economic activities, which leads to economic growth and development. The study is carried out critically to examine the impact of taxation revenue and its sustainability on economic growth of Nigeria from 1994 to 2021, with empirical evidence. Taxation revenue has been a major sustenance of economic growth in both developed and developing countries, as government is saddled with responsibility to cater for its citizens’ wellbeing through the provision of infrastructures, public goods, and services. However, the dwindling tax revenue and it attendant public debts in Nigeria became a subject of research. Findings are made through application of time series secondary data, using regression analysis, correlation, cointegration and Augmented Dicky-Fuller tests. The study uses the quantitative design in its findings. The research gauges the perception of taxpayers and the government’s social responsibilities on tax revenue management. The research results led to four main conclusions. First, value added tax is reported to impact significantly on economic growth. Secondly, custom and excise duty tax is reported to have contributed positively on economic growth. Thirdly, the study revealed petroleum profit tax has negative downturn on economic growth due to the huge subsidy cost of petroleum product bore by government. Finally, the study indicates that company income tax revenue do not impact much on economic growth due to multiple taxation on corporate income which affects savings and investment. The research also looks into the future implications of this findings on the Nigerian tax administration and economic growth and recommends some policy measures to be put in place to hold a more sustainable revenue drive, effective and efficient tax administration, and good management of tax resources in Nigeria. Moreover, suggestions are made for further research.

Keywords:
taxation regression time series cointegration ADF economic growth

This work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

References:

[1]	Federal Government of Nigeria, 2011. Constitution of the Federal Republic of Nigeria (Third Alteration). The National Industrial Court.
[2]	Onakoya, A., and Afintinni, O. (2016). Taxation and Economic Growth in Nigeria. Asian Journal of Economic Modelling, 4 (4), 199-210.
[3]	Ogbonna, G.N., and Appah, E. (2016). Effect of Tax Administration and Revenue on Economic Growth in Nigeria. Universal Journal on Sustainable Developmental Research (USDR).
[4]	Akwe, J.A. (2014). Impact of Non-oil Tax Revenue on Economic Growth: The Nigerian Perspective. International Journal of Finance and Accounting, 3(5): 303-309.
[5]	Ihendinihu, J.U., Ebieri, J., and Ibanichuka, E.A.L. (2014). Assessment of the Long-Run Equilibrium Relationship between Tax Revenue and Economic Growth in Nigeria: 1986 to 2012. The SIJ Transactions on Industrial, Financial & Business Management (IFBM) 2(2) 39-47.
[6]	Lyndon, M.E., and Paymaster, F.B. (2016). The Impact of Company Income Tax and Value Added Tax on Economic Growth: Evidence from Nigeria. European Journal of Accounting, Auditing and Finance Research 4, (7) 106-112.
[7]	Okafor, R.G. (2012). Tax Revenue Generation and Nigerian Economic Development. European Journal of Business and Management, 4, (19).
[8]	Abata, M.A. (2104). The Impact of Tax Revenue on Nigeria Economy (A Case Study of FBIR). Journal of Policy and Development Studies 9. (1) 109-121.
[9]	Ayuba, A.J. (2014). Impact of Non-oil Revenue on Economic Growth: The Nigerian Perspective. International Journal of Finance and Accounting. 3(5), 303-309.
[10]	Macek, R. (2014). The Impact of Taxation on Economic Growth: Case study of OECD Countries. Review of Economic Perspectives, 14(4), 309 – 328.
[11]	Ude, D.K., and Agodi, J.E. (2014). Investigation of the Impact of Non-Oil Revenue on Economic Growth in Nigeria. International Journal of Science and Research (IJSR). 3 (11) 2319- 7064.
[12]	Out, H.B., and Theophilus, O.A. (2013). The Effects of Tax Revenue on Economic Growth in Nigeria. International Journal of Humanities and Social Science Invention ISSN (Online): 2319-7722.
[13]	Gacanja, E.W. (2012). Tax Revenue and Economic Growth: An Empirical Case Study of Kenya. Unpublished MBA Project, University of Nairobi.
[14]	Muriithi, C.M. (2013). The Relationship Between Government Revenue and Economic Growth in Kenya. International Journal of Social Sciences and Project Planning Management. Vol 1, Issue 1.
[15]	Abiola, J. and Asiweh, M. (2012). Impact of Tax administration on government revenue in a developing economy-a case study of Nigeria. International journal of business and social science vol. 3 No. (8).
[16]	Ijieh, S.O. (2014). Promoting Sustainable Development in Nigeria through the Non-Oil Sector Export. Research Journal on Humanities and Social Sciences, Vol.4 (8).
[17]	Abomaye-Nimenibo, A.S. (2017 b). The Concept and Practice of Taxation in Nigeria. Port Harcourt, Nimehas Publishers.
[18]	Ofoegbu, G.N., Akwu, D.O., and Olive, O. (2016). Empirical Analysis of Effect of Tax Revenue on Economic Development of Nigeria. International Journal of Asian Social Science, 6(10): 604-613.
[19]	Anyaduba, J.O. (2004). Partnership Taxation in Nigeria. ICAN Student Journal, 9(2): 15-17.
[20]	Brautigam, D. (2008). Taxation and Governance in Africa. AEI online. Available from: http://www.aei.org/publication/taxation-andgovernance-in-africa [Accessed 27th September 2015]
[21]	Jhingan, M.L. (2011). “Money, Banking, International Trade and Public Finance”. 8th Edition, Urind Publication Ltd, Mayur Vihar Phase 1 Delhi.
[22]	Musgrave, R.A., and Musgrave, P.B. (2004). Public Finance in Theory and Practice. 5th Edition. New Delhi: Tata McGraw.
[23]	Ekeoha, P.C., Ekeoha, C.S., Malaolu, V., and Onyema, M. (2012). “Revenue Implications of Nigeria’s Tax System”. Journal of Economic and Sustainable Development, Vol. 3, No. 8.
[24]	Nwezeaku, N.C. (2005). Taxation in Nigeria: Principles and Practice, Owerri Springfield Publishers.
[25]	Cutt, J. (1969). Taxation and Economic Development in India. New York: Fredrick A. Praeger Inc.
[26]	Umoru, D., and Anyiwe, M.A. (2013). “Tax Structures and Economic Growth in Nigeria: Disaggregated Empirical Evidence”. Research Journal of Finance and Accounting, 4(2), 65-79.
[27]	Ariyo, A. (1998). Productivity of the Nigerian Tax System: 1970 to 1990. African Economic Research Consortium, Nairobi Kenya.
[28]	Odusola, A. (2006). Tax Policy Reforms in Nigeria. Research Paper No. 2006/03 United Nations University. World Institute for Development Economics Research. OECD (1995), Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, OECD, Paris.
[29]	Osiegbu, P.I., and Nnamdi, I. (2009). Public Finance: Theories and Practices. Asaba: C.M. Global Company Ltd., Asabi.
[30]	Ogbonna, G. N., and Ebimobowei, A. (2011). Impact of Tax Reforms and Economic Growth in Nigeria. Maxwell Scientific Organization.
[31]	Bhartia, H.L. (2009). Public Finance. 14th Edition. Vikas Publishing House PVT Ltd, New Delhi.
[32]	Anyanfo, A.M.O. (1996). “Public Finance in a Developing Economy: The Nigerian Case”, Department of Banking and Finance, University of Nigeria, Enugu Campus. Enugu.
[33]	Saima, S., Tariq, A., Muhammad, F.R., Sofia, A., and Amir, A. (2014). Taxation Effects on Economic Activity in Pakistan. Journal of Finance and Economics, 6 (2): 215-219.
[34]	Ravindra, T., Ambalika, S. and Sweta, A. (2011). The Effect of Value Added Taxes on the Indian society. Journal of Accounting and Taxation, 2 (3): 32-39.
[35]	Chibu E.E., and Njoku, C.O. (2015). Annual Report 2015. Corporate Activities of Standard Alliances Insurance Plc. Economic Review, vol. 40, pp 1521–40.
[36]	Dritsaki, C. and Katrina, G. (2005). Taxes and Economic Indicators: an empirical investigation for Greece. Greek Journal of public economics Vol.55 pp 34-54.
[37]	Success, M.J., Success, E.B., and Ifurueze, M.S.K. (2012). “Impact of Petroleum Profits Tax on Economic Development of Nigeria”. British Journal of Economic Finance and Management Sciences, Vol. 5, No. 2, Pp. 60-70.
[38]	Chigbu. E.E, Linus, E.A., and Appah, E. (2012). “An Empirical Study on the Causality Between Economic Growth and Taxation in Nigeria”. Current Research Journal of Economic Theory 4(2), pg. 29-38.
[39]	Fasoranti, M.M. (2013). Tax Productivity and Economic Growth. Lorem Journal of Business and Economics. 1 (1), 1-10.
[40]	Adegbie, E., and Fakile, A. (2011). The Relationship between Company Income Tax and Nigeria’s Economic Development for the period 1981-2007. Global Journal of Management and Business Research. 11 (96), 1-5.
[41]	Koehler, A.B., and Murphree, E.S. (1988). A comparison of the Akaike and Schwarz Criteria for selecting model order. Journal of the Royal Statistical Society, Series C (Applied Statistics), 37 (2): 187-195.
[42]	Iworiso, J. (2020). Multivariate Time Series Analysis to Impact Assessment of Nominal Economic Indicators on Federal Government Revenue and Economic Growth in Nigeria. American Journal of Applied Mathematics and Statistics, 8(3), 69-89.
[43]	Iworiso, J. (2021). Post Hoc Analysis of Life Expectancy in West Africa. American Journal of Applied Mathematics and Statistics, 9(2), 57-65.