TAX AND INCOME REDISTRIBUTION IN NIGERIA

ABSTRACT

The aim of this research, is to scrutinize the relationship between tax and income redistribution in Nigeria for a period of eleven (11) years from 2011-2022. This study reviewed works of several authors. Specifically, the study investigated the impact of direct tax proxy by Company Income Tax (CIT) as well as Petroleum Profit Tax (PPT) and indirect tax proxy by Value Added Tax (VAT) as well as Stamp Duty (SD), on income redistribution in Nigeria. To guide the study, two hypotheses were raised which are outlined thus: Direct tax has no significant impact on income inequality in Nigeria and Indirect tax has no impact on income inequality in Nigeria. To achieve this, Ordinary Least Square (OLS) technique of model estimation was employed. The study utilized the cross sectional and time series design properties. Cross sectional data regression was adopted as data analysis method for the study. The analysis of the study revealed that Company Income Tax (CIT) had a negative but insignificant impact on income inequality in Nigeria, Petroleum Profit Tax had a statistically negative but significant effect on income inequality in Nigeria, Value Added Tax (VAT) had a positive but insignificant effect on income inequality and Stamp Duties (SD) had a negative yet insignificant effect on income inequality in Nigeria. The study however recommends that there should be an introduction and proper implementation of a luxury tax system where the rich will be made to pay tax on the consumption of more luxury goods than the poor so that, the revenue generated from luxury tax will be effectively utilized for the provision of free education and medical services for the citizens.