Impact of tax revenue productivity on economic growth in Nigeria

Abstract

This study investigates the impact of tax revenue productivity on economic growth in Nigeria using annual time-series data from 1981 to 2020 employing an auto regressive distributed lag (ARDL) model. The empirical findings showed that total tax does not significantly influence economic growth in Nigeria. In specific terms, the current level of total tax has a positive and insignificant relationship with real gross domestic product in Nigeria. While custom and excise duties significantly impact economic growth in both the short run and long run. Also, value added tax did not significantly impact economic growth in the short run and long run. The implication is that Nigeria's tax system is suffering from different structural problems such as lack of accountability on the side of the tax collectors and officials, mismanagement of tax revenue collected by the government, hence its (total tax revenue) insignificant impact on the Nigeria economy. The study recommends that fiscal measures that would increase domestic revenue through broadening the revenue base, enhance tax capacity, and reduce wasteful government spending should be encouraged and to enhance the tax base of government, employment opportunities  should  be  created  and  a  good  environment  for  entrepreneurship  and innovation  to  thrive must  be  provided.