ABSTRACT

This study looked at how tax income affects economic growth in Nigeria. This was done despite the fact that the Federal Government of Nigeria adopted value added tax (VAT) in 1993 to replace sales tax. The goal was to enhance the government's tax base and make monies accessible for development objectives, which would help to promote long-term economic growth. Time series data on VAT, economic growth, company income tax, petroleum profit tax, customs and excise duties from 2003 to 2022 were obtained from the Federal Inland Revenue Service (FIRS) and the Organisation for Economic Cooperation and Development (OECD) and analysed using descriptive statistical and error correction model methodologies. The findings revealed that VAT revenue has a strong positive impact on economic growth in both the long and short term. Similarly, corporation income tax, petroleum profit tax, and customs and excise levies all had a considerable impact on economic growth during the study period. Based on our findings, the study indicates that Nigeria has begun to reap large benefits from tax collection in both the short and long run, with a major impact on long-term economic growth.