SOURCE:

Faculty: Management Sciences
Department: Banking And Finance

CONTRIBUTORS:

Ezu, G. K.
Ibenta, S. N. O.

ABSTRACT:

This research work examined the effect of tax revenue on selected macro-economic variables in Nigeria (2000-2013). There were propositions that increase in tax revenue will lead to increase in economic growth and macroeconomic stability. There is need to validate this assumption and study the effects of tax revenue on these variables in Nigeria. The variables analysed in this study include; total tax revenue, inflation, interest rate, Gross Domestic Product, Exchange rate and Government expenditure. The main objective of the study was to critically examine the effect of total tax revenue on these selected macro-economic variables in Nigeria. The study made use of secondary data collected from the CBN Annual Statistical Bulletin, National Bureau of Statistics and Federal Inland Revenue Service Journals. The result of the correlation analysis showed that most of the variables employed are highly correlated. The directions of the correlation for some are positive, while some variables are negative. Heteroskedasticity test and Ramsey RESET test were performed in order to validly test the hypotheses and estimate the coefficient. Regression analysis was carried out using E-views8.0. The result of the findings show that total tax revenue and consumption and property tax had positive but insignificant effect on gross domestic product while company income tax has positive and significant effect on gross domestic product. Personal income tax has insignificant negative effect on gross domestic product therefore,the null hypothesis that there is no significant effect of total tax revenue on gross domestic product in Nigeria was accepted. On the other hand, total tax revenue, personal income tax, company income tax and consumption and property tax had negative but insignificant effect on inflation while exchange rate, money supply and interest rate had insignificant positive effect on inflation. To this end, the null hypothesis that there is no significant effect of total Tax Revenue on inflation in Nigeria was accepted. In the same vein, total tax revenue, personal income tax and inflation rate had negative but insignificant effect on interest rate while company income tax, consumption and property tax and money supply had positive but insignificant effect on interest rate in Nigeria. The regression outcome shows that total tax revenue had positive effect on interest rate. However, the effect is not statistically significant. To this end, the null hypothesis that there is no significant effect of total Tax Revenue on interest rate in Nigeria was accepted.