A Time Series Analysis of Effect of Tax Revenue on Economic Development of Nigeria

Abstract

This study investigated the effect of tax revenue on the Economic development of Nigeria for the period of 1995-2014, with the purpose of finding out if tax revenue represented by Value Added Tax, Company Income Tax and Customs and Excise Duties could affect economic development proxied by Human Development Index for the period of the study. The data which are secondary in nature were analysed using Multiple Regression Analyses for the three research questions and three hypotheses in the study. The findings reveal that revenues collected by the federal government through CIT, VAT and CED have a positive relationship with Human Development Index. Based on the findings, it was concluded as follows: That revenues collected by the federal government through company income tax, value added tax, customs and excise duties help to improve the human development index of Nigeria. Based on the findings and conclusions, we make the following recommendations: The federal government should sensitize tax payers on the need for tax payment and punishment for non-compliance. Furthermore, it was recommended that incentives be provided to tax payers to encourage them (especially corporate bodies) to pay their taxes. Finally, we recommend that tax authorities should encourage tax education for its workforce in order to achieve the desired revenue drive. Keywords: Company income tax, value added tax, customs and excise duty, human development index.