EFFECT OF FEDERALLY COLLECTABLE TAXES ON ECONOMIC GROWTH IN NIGERIA

Download PDF

Authors

Dr. Chinedu Blessing-Mike Obialor¹

Department of Taxation/Finance, Faculty of Arts, Management & Social sciences, University of Agriculture and Environmental Sciences Umuagwo Imo  State Nigeria. E-mail [email protected] or [email protected] phone no: 08036862482

Victor Oluchukwu Ezeh²

Department of Taxation, Faculty of Arts, Management & Social sciences, University of Agriculture and Environmental Sciences Umuagwo Imo  State Nigeria.  

[email protected]  phone no: 09061436328

Chigozie Camillus Ibe³

Department of Banking and Finance, Federal Polytechnic Oko, Anambra State. E-mail [email protected]  phone no: 08037906520

Dr. Kelechi Margaret Amasiatu⁴.

Department of Accounting, Faculty of Arts, Management & Social sciences, University of Agriculture and Environmental Sciences Umuagwo Imo  State Nigeria.

[email protected]  Phone no: 0803966101

Abstract

This study investigates how federally collectable taxes influence economic growth in Nigeria over the period 2015 to 2025. It focuses specifically on Petroleum Profit Tax (PPT), Company Income Tax (CIT), and Value Added Tax (VAT), and their relationship with Gross Domestic Product (GDP). The study is motivated by the persistent concern that Nigeria’s economic growth remains weak and unstable, even though tax revenues have continued to rise. An ex-post facto research design was used, relying on secondary time-series data obtained from the Central Bank of Nigeria (CBN), National Bureau of Statistics (NBS), and Federal Inland Revenue Service (FIRS). The Autoregressive Distributed Lag (ARDL) approach was applied to capture both short-run and long-run dynamics, while standard tests including unit root, multicollinearity, checks were conducted to ensure reliable results. Findings show that PPT, CIT, and VAT all have positive and statistically significant effects on economic growth in both the short and long run, with VAT exerting the strongest long-run influence. The error correction term confirms a stable long-run relationship and a relatively quick adjustment back to equilibrium aftershocks. The study concludes that federally collectable taxes play an important role in driving economic growth in Nigeria, although their full impact is still limited by institutional and governance challenges. It recommends strengthening tax administration, improving compliance, and enhancing transparency in public financial management.

Keywords: Taxation, Economic Growth, Petroleum Tax Profit, Revenue