ABSTRACT

The purpose of this study was to ascertain the effect of indirect tax on income inequality in Nigeria. However, in order to achieve the objectives of this study, we utilised three explanatory variables as proxies for indirect taxes (value added taxes, custom and excise duties, and stamp duties) while GINI coefficient was used as a proxy for income inequality. The study covered a time period of 1990-2021 (32years).

The empirical analysis was conducted via the ordinary least square analytical techniques and revealed that only value added taxes had a significant relationship with income inequality in Nigeria while the other variables (custom & excise duties and stamp duties) has an insignificant relationship with income inequality in Nigeria.

Based on these findings, we recommended that: Value added taxes should be effectively monitored, controlled and strengthened in order for the government of Nigeria as well as tax regulators to effectively capitalize on its significant relationship with income inequality for optimum income redistribution in Nigeria; custom and excise duties should be improved on by engaging in several reforms as to increase its effect on income inequality in Nigeria; and the tax regulators of Nigeria should improve on their indirect tax administration in relation to stamp duties by formulating and implementing effective measures for stamp duties collection and utilisation in Nigeria.