EFFECT OF TAX REVENUE ON ECONOMIC GROWTH IN NIGERIA (1984 – 2024)

ABSTRACT This research examines the relationship between tax revenue and Nigeria's growth in the economy from 1984 to 2024, with a particular emphasis on Value Added Tax (VAT), Companies Income Tax (CIT), and Petroleum Profit Tax (PPT). This study's primary goal was to assess how these taxes affected GDP both separately and collectively. In order to use secondary yearly data from the Federal Inland Revenue Service (FIRS), Central Bank of Nigeria (CBN), and OECD, the study used an ex-post facto design. Descriptive statistics, Ordinary Least Squares (OLS) regression, and the Augmented Dickey-Fuller (ADF) unit root test were part of the analysis. The results showed that VAT had a positive but statistically insignificant effect on economic growth, but PPT and CIT had a significant positive influence. The majority of fluctuations in Nigeria's GDP throughout the research period were jointly explained by tax revenue variables, according to the high R-squared (98%) value. According to the study's findings, companies’ income taxes and petroleum taxes are important forces behind economic growth, but VAT’s impact is still low, mostly because of difficulties with compliance and collection. It suggests that the government improve tax administration, expand the tax base, and guarantee openness in the allocation of tax funds. By doing this, long-term growth will be maintained, compliance will be enhanced, and dependency on oil income will be lessened.