CAPITAL FLIGHT, TAX REVENUE AND ECONOMIC GROWTH IN NIGERIA, 1980-2024

The problem of capital flight is closely linked to the issue of tax revenue in Nigeria. The massive outflow of capital has resulted in a decline in tax revenue, as companies and individuals seek to avoid paying taxes. Therefore, the study examined the relationship between capital flight, tax revenue and economic growth in Nigeria from 1980-2024. The adopted Augmented Dickey Fuller (ADF) unit root and Auto-regressive distributed lag (ARDL). The ADF test estimates showed that gross domestic product and capital flight were stationanary at level, while total tax collection, external debt, effective exchange rate and inflation rate were stationary at first level difference. This implies that the variables were absence of stationary problem at level and first level differences. Also, the bound test estimate showed a long relationship among variables. The ARDL found that capital flight significantly hinders economic growth in both the short and long run, with coefficients of 45.7% and 41.2%, respectively, total tax collection and external debt had a positive but non-significant effect on it, effective exchange rate showed a negative sign and significantly related to gross domestic product, while inflation rate was negative and non-significant. The study concluded that excessive capital flight has both long-run and short-run adverse impact on aggregate output; while, Nigeria's tax revenue contribution to economic growth has been limited. Therefore, recommended that government should create a favourable investment climate by offering tax incentives, and improving the ease of doing business in Nigeria to mitigate the negative impact of capital flight on economic growth, while, the government should diversify revenue sources beyond oil by strengthening the non-oil sector, particularly tax administration.