NON-OIL TAX REVENUE AND ECONOMIC GROWTH OF NIGERIA

Abstract

This study examines the impact of non-oil tax revenue on the economic growth of Nigeria for a period of twenty four (24) years (1994-2017) using GDP as a measure of economic growth while Companies Income Tax (CIT), Value Added Tax (VAT) and Customs and Excise Duties (C&ED) are used as proxies for non oil tax revenue. Time series data were quantitatively retrieved from the reports Federal Inland Revenue Service, Nigeria Customs Service and Central Bank of Nigeria Statistical bulletin. The study uses descriptive statistics, correlation and Arch model time series regression to analyze the data having also carried out some robustness tests such as: VIF test for multicollinearity, Breusch-Pegan test for heteroskedasticity, Shapiro-Wilk test for normality, Dickey fuller test for unit root and breusch-Godferey LM test for autocorrelation. The result of the Autoregressive Conditional Heteroskedasticity (ARCH) model revealed that CIT and VAT have significant positive impact on the economic growth of Nigeria, while C&ED has insignificant positive impact on economic growth. This shows that both CIT and VAT contribute significantly to the growth of Nigeria economy. Consequent upon the findings of this study, it was recommended among others, that Government should continuously mount pressure on FIRS for more robust CIT and VAT revenue through: the extension of VAIDs for five (5) years with a commensurate penalty for non compliance, routine tax audit particularly on companies and sustain the e-platform for registration and remittances to capture more persons and organizations into the tax net.