THE EFFECT OF TAX ON GROSS DOMESTIC PRODUCT IN NIGERIA

The study examined the effect of tax on gross domestic product in Nigeria. Tax revenue is one of the sources of revenue to the government. This can be used to achieve economic growth, maintain equilibrium in the economy by combating elements of depression, inflation or deflation, achieve equity in income and wealth distribution and address issues of poverty and promote socioeconomic development, hence the need to find out the extent tax revenue impacts on Nigeria’s economic growth. The objectives of the study was to determine the effect of petroleum profit tax on the gross domestic product, to examine the effect of value added tax on the gross domestic product, to examine the effect of company income tax on the gross domestic product and to examine the effect of custom and excise duties on the gross domestic product. The technique used to select sample for the study was purposeful sampling techniques. Data relating to revenues from different tax components, investment expenditure and GDP will be collected for the year 2014-2024. The study uses correlation and regression analysis technique to examine the effect of revenue generation on the growth of Nigerian economy which will be measured using its Gross Domestic Product (GDP). The data for study was analyzed using multiple regression and correlation techniques. The study revealed that Value Added Tax (VAT) had a negative and significant effect on Gross Domestic Product (GDP) of Nigeria. It also discovered from the study that the petroleum profit tax has no significant positive effect on economic growth in Nigeria. It was found out that company income tax has no significant positive effect on economic growth in Nigeria. The study recommended that tax administrative loopholes should be plugged for tax revenue to contribute immensely to the development of the economy since past value added tax and custom and excise duty had a significant impact on economic growth.