THE GROWTH AND STRUCTURE OF THE NIGERIAN FEDERAL TAX REVENUE
THE GROWTH AND STRUCTURE OF THE NIGERIAN FEDERAL TAX REVENUE
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Date
1998-08
Authors
ENIMOLA, SAM SUNDAY
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Abstract
The study attempts to analyse the role taxation
played in economic development. The kernel of this role
is built upon the use of tax revenue as a form of capital
accumulation via Government Spending.
In line with the classical economic synthesis, the
study attached importance to the role of capital
accumulation in stimulating economic growth. The index of
growth in economic development as stimulated by tax
revenue is the degree of responsiveness of change in GDP
resulting from changes in tax revenue base, which is
r e f e r e d to as tax r e v e n ue
elasticity/buoyancy/flexibility.
The elasticity coefficient (b) measured using a nonlinear
equation model, is used as a proxy to depict the
degree of this responsive relationship between tax
revenue and GDP.
The study, reveals a very considerable growth rate
in the various tax base over the period of study except
for the Personal Income Tax (PIT), which continue to
decline. Appreciable increase is recorded mostly by the
Petroleum Profit Tax (PPT) component; this tax base
continue to have a considerable share in total tax
revenue.
The increase in PPT and Company Income Tax (CIT)
have a meaningful effects on the Direct Tax Components
which comprises PPT, PIT and CIT. Direct Tax component
increases more than the indirect tax component made up of
Export, Import and Excise Duties.
The total Tax Revenue maintained a continous growth
in its share to total Government Revenue over the period,
and also in its relative contribution to GDP.
The buoyancy/elasticity coefficient (b) is said to
be GDP elastic if it is greater than unity and inelastic
if it is less than unity. The negative or positive sign
of ' b' shows the direction of linear relationship between
the dependent variable (Tax Revenue) and the independent
variable (GDP). The scope is divided into three phases
(i) 1970-1982) ii (1983-1995) and (iii) 1970-1995.
The regression results between the period of 1970-
1982, showed an elastic/buoyant responsivesness of tax to
changes in GDP for almost all the tax bases except for
the indirect tax components. The indirect tax component
though GDP in elastic, showed a positive linear
relationship except for export duties which showed a
negative linear relationship throughout the different
period studied.
The regression results between the period of 1983-
1995 depicts an inelastic/inflexibility responsiveness of
tax to GDP changes for all base except for import duties
which showed a considerable elasticity coefficient.
Contrary to a priori expectation, and the marginal
contribution of PPT to tax revenue, and the relative
importance of the petroleum sector to the economy, the
PPT was GDP inelastic between 1983-1995 and for the
aggregate period of between 1970-1995; though it showed
a positive linear relationship. This revealed that an
improvement in the marginal contribution of tax revenue
to GDP might not automatically determine its
flexibility/stabilization effect in the process of
economic development
Description
BENIG A THESIS SUBMITTED TO THE
POSTGRADUATE SCHOOL,
AHMADU BELLO UNIVERSITY, ZARIA,
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE AWARD OF DEGREE OF MASTER OF
SCIENCE IN ECONOMICS.
DEPARTMENT OF ECONOMICS
FACULTY OF SOCIAL SCIENCES
AHMADU BELLO UNIVERSITY
ZARIA, NIGERIA.
OCTOBER, 1998
Keywords
GROWTH,, STRUCTURE,, NIGERIAN,, FEDERAL,, TAX REVENUE