DETERMINANTS OF TAX REVENUE IN NIGERIA (1986 -2010)

DETERMINANTS OF TAX REVENUE IN NIGERIA (1986 -2010)

Abstract:

This thesis focused on the determinants of tax revenue in Nigeria. Understanding the determinants of tax revenue has become increasingly important based on the need to improve government and economic performances both of which are currently in distress. The prevailing tax system is characterized by a declining tax burden, few broadly-based taxes and inefficient tax administration. The study applied the Vector Auto regression Models over the period 1986-2010 to analyze the impact of per capita income, share of agriculture in GDP, share of service sector in GDP, share of manufacturing sector in GDP, ratio of exports plus imports to GDP,exchange rate of Naira, broad money supply, rate of inflation, external debt, foreign aid and political stability (dummy variable) in Nigeria on tax revenue. The empirical results suggest that per capita income, manufacturing, services, broad money supply and political stability are significant determinant of tax efforts in Nigeria with expected signs.Finally, it is concluded that the Nigerian economy can generate high tax to GDP ratio by boosting the per capita income, manufacturing and service sector. Monetization of the economy and democracy equally boost tax revenue while effort should be made towards mechanizing and reforming the agricultural sector in order to derive maximum tax revenue from the sector.

DETERMINANTS OF TAX REVENUE IN NIGERIA (1986 -2010)