EFFECT OF TAX REFORMS ON REVENUE GENERATION IN NIGERIA

ABSTRACT The main objective of this study is to ascertain the impact of tax reforms on revenue generation in Nigeria. Specifically, focusing on Petroleum Profit Tax (PPT) and Company Income Tax (CIT) as proxies for tax reform, while Total Federally Collected Revenue (TCFR) serves as the dependent variable. The study employed annual time series data spanning the years (1993 - 2023). Utilizing time series data sourced from the Federal Inland Revenue Service (FIRS), the research employs Augmented Dickey-Fuller unit root tests and the Autoregressive Distributed Lag (ARDL) model to assess both short-run and long-run relationships. The results reveal that CIT has a positive and statistically significant effect on revenue generation in the short run, while PPT does not exhibit any significant impact. Diagnostic checks confirm the model’s robustness, showing no evidence of heteroskedasticity or multicollinearity, though some serial correlation was corrected using Newey-West standard errors. The findings suggest that enhancing the efficiency and compliance mechanisms of CIT collection may yield better fiscal outcomes, while the underperformance of PPT points to structural inefficiencies in the oil sector tax regime. Consequently, the study recommends strengthening corporate tax enforcement, reviewing the petroleum tax framework, and broadening the tax base to ensure sustainable revenue growth. This research contributes to the literature by offering up-to-date empirical insights into Nigeria’s tax system and providing policy-relevant recommendations for fiscal reform. The research contributes to the existing literature by providing recent empirical evidence and offering policy-relevant insights for improving Nigeria's tax system