Tax Reforms in Achieving Economic Growth In Nigeria.

Abstract

The objective of the study was to determine the effect of tax reform on economic growth in Nigeria. Tax reform was proxy with Company Income Tax (CIT), Value Added Tax (VAT), and Petroleum Profit Tax (PPT) while Real Gross Domestic Product was the proxy for Economic Growth. Time series data was collected from the website of Federal Inland Revenue Services and Central Bank of Nigeria for a period of 10 years covering 2011-2020. The data was analyzed using descriptive statistics (mean, standard deviation, skewness, and kurtosis) and Regression analysis was used to test the hypothesis. The results showed that Company Income Tax has a positive significant effect on Economic Growth (t = 5.321, 0.002). VAT and PPT does not significantly affect Economic Growth; Value Added Tax has a positive insignificant effect on GDP (t = 0.527, 0.617), and Petroleum Profit Tax has a negative insignificant effect on GDP (t = -1.911, 0.105). The study concluded that tax reform affects economic growth (F= 31.275, 0.000). Based on the findings and conclusion, the study recommends that the VAT Act and PITA be further reformed. Also, tax authority should ensure strict compliance of citizens and organizations to the laws. It is also recommended that tax revenue should be efficiently used to bring about economic growth.