Impact of Oil and Non-oil Tax Revenue on Economic Growth in Nigeria

In Nigeria, there has been a decline in oil revenue. This has impacted negatively on infrastructural development. This paper seeks to examine the effect of non-oil revenue as an alternative source of revenue for infrastructural development. The research design of the study was the ex post facto research design. The source of data was the secondary source and a time series of data from 1981 to 2021 was used in carrying out the research. The Autoregressive Distributed Lagged (ARDL) bounds test was used to determine the long-run and short-run relationship between the dependent and independent variables. It was observed that the variables are co-integrated, and as such, a long-run and short-run relationship exists among the explanatory variables. Furthermore, the ARDL short-run estimation result shows that the non-oil tax variables (proxied by VAT, CUSTD, and CIT) have a positive and significant effect on infrastructural development (proxied by total electricity production measured in Gigawatt hours (GWh) in Nigeria. In tandem, the ARDL long-run estimation results reveal that value-added tax, customs duties, and company income tax have a positive and significant impact on infrastructural development in Nigeria. Hence, an increase in the non-oil tax revenue base will boost infrastructural development in Nigeria in the long run. This finding is in tandem with the ARDL short-run estimation result. Therefore, it is inferred that Nigeria can experience infrastructural development when genuine commitment is made to explore an increase in non-oil revenue generation instead of being over-dependent on oil revenue.

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Effect of Federal Government Tax and Non-Tax Revenue on Economic Growth in Nigeria

James Oladejo

2024

African Journal of Accounting and Financial Research

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The objective of this study was to analyse the influence of tax and non-tax revenue generated by the federal government on the economic growth of Nigeria. The study utilised an ex post facto approach and specifically examined the Nigerian economy as a whole, resulting in a population and sample size of one. Data was collected from secondary sources, including the yearly reports and statistics releases of the CBN and the office of the Federal Inland Revenue Service (FIRS). The study spanned a decade, specifically from 2001 to 2020. The hypotheses were tested using simple linear regression for data analysis. The regression study revealed a substantial influence of federal government tax income on economic growth. The F-statistic yielded a value of 466.0399, the P-Value was determined to be 0.000, and the R-squared value was calculated as 0.962813. These results indicate that about 96.28% of the variability in real GDP can be accounted for by tax revenue. Similarly, the analysis demonstrated a substantial impact of non-tax revenue from the federal government on the growth of the economy. The F-statistic yielded a value of 201.5388, the P-Value was found to be 0.000, and the R-squared value was determined to be 0.918010. These results indicate that about 91.80% of the variance in real GDP can be accounted for by non-tax revenue. Moreover, the economic growth was significantly influenced by the overall revenue of the federal government. The F-statistic yielded a value of 469.5482, indicating a strong statistical significance. The P-value was 0.000, further confirming the significance of the results. The R-squared value was 0.963081, indicating that approximately 96.31% of the fluctuation in real GDP can be accounted for by total tax revenue. These findings emphasise the essential importance of both tax and non-tax revenue, namely from the federal government, in stimulating economic growth. In order to increase revenue generation, it is crucial for the government to give priority to enhancing tax administration and compliance. This can be accomplished by implementing efficient tax regulations, streamlining tax procedures, and establishing strong monitoring and enforcement measures. Furthermore, it is advisable to diversify non-tax revenue streams beyond oil.

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Impact of Oil and Non-oil Tax Revenue on Economic Growth in Nigeria

Cited by 4 publications

References 5 publications

Non-Oil Private Sector Production and Fiscal Policy in Saudi Arabia

Non-Oil Private Sector Production and Fiscal Policy in Saudi Arabia

Non-Oil Tax Revenue and Infrastructural Development in Nigeria

Effect of Federal Government Tax and Non-Tax Revenue on Economic Growth in Nigeria

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