Taxation and Income Inequality in Nigeria

Anyaduba, John Obiora; Otulugbu, Praise Oghenefejiro

doi:10.5430/afr.v8n3p118

Cited by 9 publications

(16 citation statements)

References 12 publications

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“…Tax according to Ariwadola (2008) is a way by which nations implement decisions to transfer financial resources from private sector to the public sector [6]. Similarly, Anyaduba (2004) described tax as asustainable sources of revenueto government for implementation of its programmes [5]. From these definitions, it can been seen that as a way of raising revenue for government to finance its numerous activities.…”

Section: Literature Reviewmentioning

confidence: 99%

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Tax Revenue Collections and Health Care Infrastructural Development in Nigeria

Mustapha¹,

Olalekan²,

Damilola³

et al. 2022

JFA

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The serious challenges faced by the health sector in Nigeria in term of infrastructural decay in recent time are worrisome issues for the stakeholders in the health sectorthe degree of neglect in the sector couple with sustainable revenue sources like Taxation available for government to finance this sector infrastructure called for attention of the stakeholders. This study therefore assesses effect of tax revenue collections on health care infrastructural development in nation from 2013 to 2020. The study employed secondary data from CBN Statistical Bulletin and the office of Federal Inland Revenue for analysis. Revenue Collections from Company income Tax (CIT), petroleum Profit Tax (PPT), Education Tax (EDT) and Value Added tax (VAT) were used as proxies for Tax revenue collections while Government expenditure on health infrastructure was adopted as proxy for Health Care Infrastructural Development. Multiple linear regression method was adopted for data analysis. The paper establishesthat PPT and VAT strongly influenced infrastructural development in the health care sector in Country. The study therefore recommends effective and efficient transparent collection of these taxes and political will to transparently spending this revenue towards boasting the health care development in the Nigeria.

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Section: Literature Reviewmentioning

confidence: 99%

“…It is worth to note that this study's scope did not capture the recent period covered in this study. Similarly, in Nigeria, the work of Anyaduba (2004), geared towards examining the influence of tax revenues on infrastructural development in country. The work make used of federal collected tax revenue from 1980-2014.…”

Section: Literature Reviewmentioning

confidence: 99%

Tax Revenue Collections and Health Care Infrastructural Development in Nigeria

Mustapha¹,

Olalekan²,

Damilola³

et al. 2022

JFA

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“…Ichoku and Anuku (2019) only used state level (i.e., very small sample) data to analyse the effect of only personal income tax on income inequality, ignoring its effect on poverty levels in Nigeria. Other studies (Obaretin, Akhor and Oseghale 2017;Anyaduba and Otulugbu 2019) on this issue in Nigeria have only used macro level time series data, which is clearly unable to rigorously speak to equity and redistribution issues at the household level. The current study, however, attempts to use the most recent large nationally representative household survey to quantitatively analyse at the micro level not just the progressivity of personal income tax, but its effect on both income inequality and poverty levels in Nigeria.…”

Section: Introductionmentioning

confidence: 99%

“…More so, to the best of the author's knowledge, quantitative household-level micro studies on progressivity and the redistributive effect of value added tax reforms in Nigeria are very rare. For instance, available studies (Oboh and Eromonsele 2018;Anyaduba and Otulugbu 2019) on the effect of value added tax on income inequality in the country have mainly used macro level time series data, with little or no effort to investigate its effect on poverty levels. Hence, to extend existing knowledge and contribute to defining recommendations on a nuanced approach to fighting poverty and bridging the income gap between the poor and the rich, the current study carried out a household-level micro analysis of the progressivity and the distributional effects of income tax and value added tax reforms on various poverty indices (poverty headcount, poverty gap and poverty severity) and income inequality across national and regional levels using the standard Kakwani Index and simple static micro-simulation model.…”

Section: Introductionmentioning

confidence: 99%

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Assessing the Equity and Redistributive Effects of Taxation Reforms in Nigeria

Edeh¹

2021

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Achieving the Sustainable Development Goals (SDGs) of poverty and inequality reduction through redistribution have indeed become critical concerns in many low- and middle-income countries, including Nigeria. Although redistribution results from the effect of tax revenue collections, micro household-level empirical analyses of the distributional effect of personal income tax (PIT) and value added tax (VAT) reforms in Nigeria have been scarcely carried out. This study for the first time quantitatively assessed both the equity and redistributive effects of PIT and VAT across different reform scenarios in Nigeria. Data used in this study was mainly drawn from the most recent large scale nationally representative Nigeria Living Standard Survey, conducted in 2018/2019. The Kakwani Index was used to calculate and compare the progressivity of PIT and VAT reforms. A simple static micro-simulation model was employed in assessing the redistributive effect of PIT and VAT reforms in the country. After informality has been accounted for, the PIT was found to be progressive in the pre- 2011 tax scheme, but turned regressive in the post-2011 tax scheme. It was also discovered that the newly introduced lump sum relief allowance in the post-2011 PIT scheme accrues more to the high-income than to the low-income taxpayers – confirming the regressivity of the current PIT scheme. However, the study further shows (through counterfactual simulations) that excluding the relatively high-income taxpayers from sharing in the variable part of the lump sum relief allowance makes PIT progressive in the post-2011 scheme. The VAT was uncovered to be regressive both in the pre-2020 scheme, and in the current VAT reform scheme. Further, after putting informality into consideration, the PIT was found to marginally reduce inequality but increase poverty in the pre-2011 scheme. The post-2011 PIT scheme reduced inequality and increased poverty, but by a smaller proportion – confirming a limited redistribution mainly resulting from the concentration of the lump sum relief allowance at the top of the distribution. However, if the variable part of the lump sum relief allowance is provided for ‘only’ the low-income taxpayers below a predefined income threshold, the post-2011 PIT scheme becomes largely redistributive. VAT was uncovered to marginally increase inequality and poverty in the pre-2020 scheme. Though the current VAT scheme slightly increased inequality, it considerably increased poverty in the country. It is therefore suggested that a better tax reform, with well-regulated relief allowance and differentiated VAT rates, will help to enhance the equity and redistribution capacity of the Nigeria tax system.

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Effect of Tax Structure on Income Inequality in Sri Lanka

Tharani,

Siriwardhane,

Silva

2024

AFR

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Growing income inequality is seen as one of the most important global concerns in this decade. Hence, the Sustainable Development Goals (SDGs) 2030 aims at reducing income inequality within and among countries. IMF emphasizes that income inequality emerged as one of the critical concerns for economic policy in both developed and developing countries. However, as shown by the UN, Sri Lanka is far lower than the South Asian regional income distribution standards owing to its high inequality. At the same time, tax revenue has become one of the major concerns in the country due to its broadened internal deficit. In this background, this study examines the short-run and long-run effects of tax structure on income inequality in Sri Lanka utilizing annual statistics from 1980 to 2019 by employing the ARDL model. Findings revealed that in the long run, value-added and excise taxes have a significant association with income inequality in Sri Lanka. However, the association between personal income tax and income inequality was positive but insignificant. In contrast, corporate income tax and import duty have a statistically significant negative association with income inequality in Sri Lanka. Further, in the short run, at the overall level taxes are not significantly associated with income inequality except the personal income tax which has a significant negative association with income inequality.

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Taxation and Income Inequality in Nigeria

Cited by 9 publications

References 12 publications

Tax Revenue Collections and Health Care Infrastructural Development in Nigeria

Tax Revenue Collections and Health Care Infrastructural Development in Nigeria

Assessing the Equity and Redistributive Effects of Taxation Reforms in Nigeria

Effect of Tax Structure on Income Inequality in Sri Lanka

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