Open Access Journal of Economic Research
ISSN: 3065-9035 | DOI: 10.64030/3065-9035
Dolapo Temitayo Lawa, Priscillia Omojo Adams, Bukunmi Samuel Ayoola and Edith Faith Arkuwoille
This study is an empirical investigation into the relationship between tax revenue and economic growth in Nigeria, using time series data from 1990 to 2022. Gross domestic product (GDP) growth is examined as the dependent variable, with hydrocarbon tax, company income tax, value-added tax, population growth, public expenditure, and initial GDP growth as explanatory variables. The study uses the autoregressive distributed lag (ARDL) model and the Bounds test to check for a long-term connection between the variables. Hydrocarbon and value-added taxes positively impact GDP growth in the short run, while company income tax is statistically insignificant. In the long run, hydrocarbon and value-added taxes negatively affect GDP growth, while company income tax positively contributes. Public expenditure has an unexpected negative effect on GDP growth, and population growth shows mixed results. The study concludes that effective tax policies, including public education, broadening the tax base, and imposing penalties for tax evasion, are essential for leveraging hydrocarbon and value-added taxes to foster economic growth in Nigeria.