Effect of Federal Government Tax and Non-Tax Revenue on Economic Growth in Nigeria.
Publication Date: 10/07/2024
Author(s): Olusola James Oladejo.
Volume/Issue: Volume 7 , Issue 3 (2024)
Abstract:
The aim of this study was to examine the impact of federal government tax and non-tax revenue on economic growth in Nigeria. The study employed an ex post facto design and focused on the Nigerian economy as a whole, making the population and sample size one. Secondary sources were used to gather data, primarily from the annual reports and statistical releases of the CBN and the Office of the Federal Inland Revenue Service (FIRS). The study covered a ten-year period from 2001 to 2020. Data analysis was conducted using simple linear regression to test the hypotheses. The results of the regression analysis indicated a significant impact of federal government tax revenue on economic growth. The F-statistic was 466.0399, the P-Value was 0.000, and the R-squared value was 0.962813, suggesting that approximately 96.28% of the variation in real GDP can be explained by tax revenue. Similarly, the analysis revealed a significant effect of federal government non-tax revenue on economic growth. The F-statistic was 201.5388, the P-Value was 0.000, and the R-squared value was 0.918010, indicating that approximately 91.80% of the variation in real GDP can be explained by non-tax revenue. Furthermore, there was a significant impact of federal government total revenue on economic growth. The F-statistic was 469.5482, the P-Value was 0.000, and the R-squared value was 0.963081, suggesting that approximately 96.31% of the variation in real GDP can be explained by total tax revenue. These findings underscore the crucial role of tax and non-tax revenue, particularly from the federal government, in promoting economic growth. To enhance revenue generation, the government should prioritize improvements in tax administration and compliance. This can be achieved through the implementation of effective tax policies, simplified tax procedures, and robust monitoring and enforcement mechanisms. Additionally, diversification of non-tax revenue sources beyond oil is recommended.
Keywords:
Taxation, Tax, Tax Revenue, Non-tax Revenue, economic growth, Gross Domestic Product (GDP).
