THE IMPACT OF TAX REFORMS ON ECONOMIC GROWTH OF NIGERIA

CHAPTER ONE INTRODUCTION 1.2 Background to the study Tax reform is a strategy for changing how the government collects and administers taxes. It is an effort to address flaws in the current tax system and could result in the adoption of a new tax rate, criminal provision, or assessment tool to enhance its effectiveness. Measures are taken to strengthen modern taxes and greatly minimize the complexity and lack of accountability of the system through tax reform (Emeneka, 2021). He further opined that tax reforms help to lessen the burden of taxes on all citizens, make the tax system more inventive and less regressive, and make it simpler by making it more accountable and comprehensible. As a result, tax reform is a crucial tool for fiscal policy that aims to improve revenue collection. Tax reform is a two-pronged strategy that calls for altering how taxes are collected and administered by the government in order to increase GDP and national profits while also benefiting the populace financially and socially (Okeke, et al 2018). Countries, both developed and developing, rely heavily on taxes as a source of income. Public utilities, social commitments, and lubricating the government's administrative machinery are all paid for through tax revenue (Emeneka, 2021). Taxation is a mandatory charge that a government must impose on its citizens in order to raise money for administrative duties (Okeke, et al 2018). According to Bird (2015), taxation is the method or tool that allows communities of people to be forced to contribute in a predetermined amount and manner for the administration and advancement of society. Reforms are necessary to bring about the necessary changes in the entire national economy since taxes are dynamic. Tax reform, according to Herbert et al. (2017), is a continuous process that policymakers and tax officials always carry out in the tax structures to reflect shifting economic, social, and political conditions. Tax reform is typically implemented to increase the effectiveness of tax collection and to promote the social and financial advantages that the tax system can provide. A tax is described as "a financial charge levied on such taxpayer by a state, or the functional equivalent of a state, on a taxpayer (an individual or legal entity)". Taxes can take the form of direct taxes on wealth and income (such as property taxes, and corporate and personal income taxes), as well as indirect taxes on consumption (such as the Value Added Tax (VAT) and excise levies). Tax reform can lower revenue avoidance and evasion while enabling more effective and fair tax collection that can fund public services and goods. It could increase the sustainability of revenue levels and encourage future independence from foreign aid and natural resource earning. Inequality issues can be addressed through income redistribution and behavior change as well as through enhancing economic growth (see Economic growth) (Bachama et al, 2021). Tax reform in developing nations entails both general questions of economic policy and specific challenges with the design and administration of the tax system (Desislava, 2017). First, there are the fundamental issues surrounding the need for money and how to integrate the earnings structure into development strategy. Alternative taxes' effects on investing and saving, as well as their ramifications for the macroeconomic balance of the economy (both domestically and internationally), are all areas of concern. Securing a just allocation of the tax burden is a crucial objective two. The design of the tax structure's main components as well as its composition must be considered among the more specialized tax issues. The challenge lies not just in deciding what would be appropriate, but also in figuring out what is administratively feasible and within the realm of political viability. The fact that Nigeria's tax structures are complex, inelastic, inefficient (raise little money but cause serious misallocation of resources), unfair and inequitable is one of their common functions (Eze, 2020). Due to the country's tax system's flaws, such as excess tax on dividends, multiple taxation by different revenue agencies, and the failure to remit tax refunds, only 10 million Nigerians out of the country's 77 million labor force paid their taxes in 2015 (Gbeke & Nkak, 2021). You might find it interesting to know that the government of President Muhammadu Buhari implemented a few tax reforms to diversify Nigeria's income and enhance tax administration through the use of organizations like the Ministry of Finance and Federal Inland Revenue Service (FIRS), as well as the introduction of the Voluntary Assets and Income Declaration Scheme (VAIDS). In order to raise at least $1 billion from unreported liabilities and increase the percentage of non-oil tax collection from six percent to fifteen percent by 2020, VAIDs was designed to ensure that both individuals and corporations willingly disclose previously undisclosed assets (Gbeke & Nkak, 2021). Additionally, the country is in a pitiful condition as a result of the sharp decline in the price of oil in recent years, since the amount of money available for distribution to the various levels of government is decreasing. This was recently demonstrated when the COVID-19 pandemic caused the price of crude oil (WTI) futures to crash to an all-time record low of -$38 per barrel on April 20, 2020. As a result of this downturn, the government was forced to look at alternative sources of domestic revenue, and taxation is the first thing that comes to mind. In the past, the Nigerian government implemented a number of tax changes with the intention of overhauling the tax system (Gbeke & Nkak, 2021). Due to their concentration on the country's tax system rather than on enhancing tax administration, these reforms, however, did not succeed in achieving the expected results. In light of this, we have chosen to investigate the effect of tax reform on Nigeria’s economic growth 1.2 Statement of the problem The Nigerian tax revenue is such that has been oscillating from one primary product as its main stay to another. Prior to the discovery of oil, the tax revenue has been based on the taxes collected from agricultural products. With the coming on stage of oil, the tax income was based on the revenue from the oil sector. This has consequences that could stagnate the economic growth of the country. With coming on stage, the democratic dispensation in 1999, efforts were made to broaden the revenue base of the country through various tax reform of different tax system, especially, in year 2004, comprehensive tax reforms that cut across all the tax system were instituted. The main aim of such the 2004 reform like other tax reforms were to increase the tax collectability and enhance economic growth through tax revenue. It is expected that the volume of revenue coming from direct and indirect system would increase. Therefore, the research is geared towards ascertaining the contributions of various tax system to economic growth in Nigeria. 1.3 Objective of the study The main objective of the study is to investigate the impact of tax reform on economic growth in Nigeria. The specific objectives are; 1. To investigate the effect of Value added tax on economic growth in Nigeria. 2. To examine the effect of petroleum profit tax on economic growth in Nigeria 3. To examine the effect of company income tax on economic growth in Nigeria 1.4 Research questions In other to address the above objectives, we considered the below research questions. 1. How does Value added tax affect the economic growth in Nigeria 2. To what extent does Petroleum Profit Tax revenue affect economic growth in Nigeria? 3. What is the effect of Company Income Tax revenue have on economic growth in Nigeria? 1.5 Research hypotheses In the light of the above questions, these hypotheses were formulated Hypothesis one 1. Ho: Value Added tax has no significant impact on economic growth in Nigeria in Nigeria H1: Value Added tax has significant impact on economic growth in Nigeria in Nigeria Hypothesis two 2. Ho: Petroleum profit tax has no significant impact on economic growth in Nigeria H1: Petroleum profit tax has significant impact on economic growth in Nigeria Hypothesis three 3. Ho: Company income tax has no significant impact on economic growth in Nigeria in Nigeria. H1: Company income tax has no significant impact on economic growth in Nigeria in Nigeria. 1.6 Scope and limitation of the study The importance of tax revenue to the expansion of the human development index is the primary focus of this research. How the tax revenue affects the progress of Nigeria, both positively and negatively, with suggestions on how we might make better use of the money brought in by taxes. This investigation is going to cover a time range of 23 years, from 2000 to 2022 1.7 Significance of the study Researcher: This study will serve as a reference to related work and show insight on tax revenue on gross domestic product in Nigeria. Policy makers and regulators: The findings would be of importance to policy makers at the national level as they plan policies with a view to enhancing growth and development through improved tax system. The Federal Inland Revenue Service will use the outcome of the study to evaluate its performance and determine the input requires of it to revamp Nigerian Economy. Business organizations: The business community shall benefit immensely from this research. The findings and recommendations of this study if adequately implemented by policy makers shall redouble the confidence of investors in government of Nigeria. Having created conducive environment for business, investors wall be attracted since the tax policies are business friendly. Academia: Academia who wish to undertake further research on taxation will find the literature of this work of immense value. It shall be added to the existing literature; and it will contribute to knowledge. 1.8 Organization of the study This study shall be divided into five chapters. Chapter one shall look into the introduction of the topic, and it contains the background of the study, the statement of the problems, the objectives of the study, research questions, research hypotheses, significance of the study, organization of the study and definition of operational terms. Chapter two shall extensively review the related literature of other authors that are relevant to this work. It shall include the preamble, conceptual framework, theoretical framework, empirical framework and summary of literature. Chapter three is the research methodology. It shall be sub divided into research design, selection of data, collection of data, reliability of instrument operational measures of variable, data analysis technique and mode of specification. Chapter four shall handle data presentation and analysis. This shall be treated under data presentation, test of hypotheses and discussion of findings. Finally, chapter five is summary of findings, conclusion , recommendation suggestion to further study and contribution to knowledge. 1.9 Definition of operational terms Taxation: Taxation refers to the practice of government levying compulsory financial obligations on private persons or corporate entities. Taxes are imposed in virtually every nation on the face of the planet, with the primary of funding governmental spending. However, taxes also serve a variety of additional function. Tax Revenue: is the term used to refer to the income that is collected by government via the process of taxing. Taxation is the major method through which the government acquires revenue. Revenue can be generated in a variety of ways, including but not limited to private businesses, public businesses, commerce, royalties on natural resources, and/or donations to international organizations. Economic Growth: Economic growth is defined as the increase or improvement in the inflationadjusted market value of an economy's goods and services over time. Statisticians traditionally measure such growth as the percentage rate of increase in real GDP. Gross Domestic Product: GDP is a monetary measure of the market value of all final goods and services produced in a given period. GDP (nominal) per capita, on the other hand, does not account for differences in the cost of living and inflation rates among countries; thus, using GDP per capita at purchasing power parity (PPP) may be more useful when comparing living standards among nations, whereas nominal GDP is more useful when comparing national economies on the international market. The contribution of each industry or sector of the economy to total GDP can also be broken down. The per capita GDP is the ratio of GDP to the total population of the region, and it is also known as the Mean Standard of Living. Petroleum Profit Tax: Section 8 of this Act imposes a tax at the prescribed rate on the profits of any company engaged in petroleum operations during that period. It is important to note that not all petroleum operations are taxed under this PPTA. The Petroleum Profits Tax is levied on the earnings of companies engaged in petroleum operations. Company Income Tax: Company Income Tax (CIT) is a tax levied on the profits of registered companies in Nigeria. It also includes the tax on profits made by foreign companies doing business in Nigeria. Limited liability companies, including public limited liability companies, pay the CIT. CHAPTER TWO REVIEW OF RELATED LITERATURE 2.1. Conceptual framework Taxation is the process of collecting taxes within a particular location, in this regards tax has been defined as "a monetary charge imposed by the government on individuals entities, transactions or properties to yield revenue (Appah 2021). Taxation is the most important component of the financial structure of any country. Taxes are imposed upon individuals and organization that are paid to the government or the state. Taxes are considered to be contributions made be individuals and business entities for the economic growth . It is the source revenue for the government to manage public expenditure. The word 'Tax' got it's origin from the latin " taxo" meaning "I estimate" Tax can be said as a compulsory financial charge or other Levy imposed on a tax payer's income, profit or gain by the government of a country to generate revenue for the provision of basic social amenities and to accomplish several economic purposes. The process of charging and collecting tax is refered to as taxation. Echekoba and Ezu (2022) defined Tax as a monetary charge by the government on individuals, corporate entities, properties or transactions to raise revenue. Tax payment is essential to raise enough revenue to fund or pay government activities and programmes. According to Brautigam (2021) a well-designed tax system can help government in developing countries prioritize their spending, build stable institutions and improve democratic accountability. The main purpose of a tax is to enable public sector finance it's activities so as to achieve some nation's economic and social goals. It can also be for the purpose of redistricting of wealth to ensure social justice (Ola, 2020). Therefore taxes can be used as an instrument for achieving both micro and macroeconomics objectives especially in developing countries such as Nigeria. Taxation in summary is the transfer of income or resources from the private sector to public sector in order to enable the public sector to carry out some, if not all of the nation's economic and social goals. The goals may be in the form of provision of government basic services regularly and particularly in the Education, public health, transportation sectors, amenities, funding the police, provision of parks and garden amongst others, pipe borne water, roads, schools, courts and capital formation. It is in view that taxation has been considered a tool for the achievement of Economic growth in various countries. In this study, three components of taxation were assessed- Company Income Tax, Value Added Tax and Personal Income Tax. First, Company Income Tax(CIT) is a tax under the Companies Income Tax Act that a resident or non- resident company incorporated in Nigeria has to pay the CITA 1961 was replaced by CIT Decree 28 of 1979. Several other amendments has since been enacted as either acts or decrees such as : Company Income Tax Act CITA 1990 which itself was amended by Decree 30 of 1996, Decree 31 of 1996, and Decree 32 of 1996 etc CITA 1990 is the enabling law that governs the collection of taxes on profits made by companies operating in Nigeria excluding companies engaged in petroleum exploration activities. This tax is payable for each year of assessment of the profits of any company at a rate of 30% ( Adereti, Sanni and Adesina, 2020). Second, Personal Income Tax (PIT) is the tax levied on the income of an individual after all allowances have been deducted from the gross payment and is deducted at source. Third, Value Added Tax (VAT) is called consumption tax and is being referred to as the amount charged by the government for every goods or services purchased from time to time. This means it can only be paid when there is consumption of goods or services. Value Added Tax is an indirect tax, which is imposed on goods and services at each stage of production, starting from raw materials to final product. VAT is levied on the value addition at different stages of production. Economic growth is seen as a long-term increase in per capital national output or net national product. It can be said as the rate of rise in total productivity must be greater than the rate of rise in the population (Egbunike, Emudainohwo and Eunardi 2022). When a country production possibility frontier (PPF) shift outward, economic growth happens. It is connected to rising average real earnings and a living standard of country (Olapade 2022). According to Hendrick (2020). Economic growth involves increasing the capacity of a country's economy to satisfy the wants and needs of inhabitants of that nation. Hendrick (2020) continued that economic growth refers to increase in output while economic development refers to all the economy, including the social , political and institutional changes that accompany changes in output. In his ageless book, the wealth of nations, Adams Smith documented that economic growth of a nation deals with sustained increase in real Gross domestic product (GPD) Per capital income and expansion of the production possibilities of an economy. The concepts of tax and tax revenue in previous researches have been largely discussed in different contents by tax experts, scholars, international organization as well as different government for example, ( the world bank, 2000) noted that taxes are a compulsory transfer of resources to the government from the rest of the economy. Globally, tax is becoming an essential revenue source for government, the income generated from tax is utilized by government in the area of providing public goods and services. However, in a simple term for the purpose of this, tax is a compulsory fee individuals as well as corporate bodies are obliged to comply with as stipulated by the tax laws, while tax revenue is the process of administering the tax laws in the way that they achieve government objectives and so, tax revenue is a major source of fund for any government and the availability of fund is a very crucial aspect of running a state. 2.1.1 Nigerian tax policy According to the report of the presidential committee on National Tax policy (2008), “The National tax policy provides a set of rules, modus operandi and guidance to which all stakeholders in the tax system must subscribe”. Tax policy formulation in Nigeria is the responsibility of the Federal inland Revenue Services (FIRS), Customs, Nigerian National Petroleum Corporation (NNPC), National Population Commission (NPC), and other agencies but under the guidance of the National Assembly i.e. the law making body in Nigeria (Presidential committee on National tax policy, 2008). Suffice it to say that if there must be any effective implementation of the Nigerian tax system or attainment of its goal, the use of the national tax policy document remain absolutely essential. According to the Presidential Committee on tax policy (2008), “Nigeria needs a tax policy which does not only describe the set of guiding rules and principles, but also provide a stable point of reference for all the stakeholders in the country and upon which they can be held accountable. James and Nobes (2008) decried the inability of tax policy to meet up with efficiency and equity criteria against which it is being judged. It was further noted that tax policy is continually subjected to pressure and changes which most time does not guarantee outcome that are in line with the overall goal. Unfortunately, most policy changes in Nigeria are without adequate consideration of the taxpayers, administrative arrangement and cost plus the existing taxes. This has in no small measure hindered the effective implementation and goal congruence of the nation’s tax system. 2.1.2 Tax reform Tax reform according to Azubike (2009) is an ongoing process which tax policymakers and tax administrators in consonance with the economic and socio-political realities continued to adopt so as to restructure the tax system for efficiency revenue generation in the country. Ogbonna et al (2012) revealed that “tax reforms improve the revenue generating machinery of government to undertake socially desirable expenditure that will translate to economic growth in real output and per capita basis”. Somorin (2010) noted that “tax reforms are embarked upon to correct the weaknesses in the existing tax system and enhance its efficiency”. The reasons for tax reforms may range from the need for additional revenue to economic growth. Tax reforms can lead to a new tax, a new rate, a new legal clause, a new assessment system such as the self assessment system introduced in 1991 or a new collection system of 2004. Tax reforms can be either progressive or retrogressive and dysfunctional. A progressive tax system is one that “is growth-oriented; aggressively seeks to minimize the distortions of market signals by the tax system, and promotes convergent expectations, serving in this way to attenuate uncertainties and obstacles to investment, innovation, entrepreneurship and other drivers of economic growth (Ogbonna et al, 2012). 2.1.3 Tax reforms in Nigeria Nigeria tax system has experienced series of metamorphoses since 1904 to date. The objectives of tax reforms in Nigeria as enumerated by Alli (2009) include: “to bridge the gap between the national development needs and the funding of the needs; to ensure taxation, as a fiscal policy instrument, to achieving improved service delivery to the public; to improve on the level of tax derivable from non-oil activities, vis-a-vis revenue from oil activities; efforts at constantly reviewing the tax laws to reduce/ manage tax evasion and avoidance; and to improve the tax administration to make it more responsive, reliable, skillful, taxpayers friendly and to achieve other fiscal objectives”. Income tax was introduced in Nigeria between 1904 and 1926 and this was followed by grant of autonomy to the Nigerian Inland Revenue in 1945. Prior to Nigeria independent in 1960, the colonial authorities prepared the ground for fiscal policies that would address post-colonial developmental challenges. Based on this, Raisman Fiscal Commission (RFC) was set up in 1958 to look into fiscal issues in order to resolve the problems of inconsistency and confusion in the existing laws. Asaolu et al (2015) noted that the commission came up with a recommendation which culminated in the enactment of five (5) legislations, namely: i. Petroleum Profit Tax Act (PPTA), 1959: A federal law dealing with the taxation of petroleum producing and marketing companies in Nigeria. This was enacted in the light of the discovery at the time of oil in Oloibiri; ii. Stamp Duties Act (SDA), 1959: A federal law for the assessment and collection of duties on „instruments‟ at both Federal and State levels; iii. Companies Income Tax Act (CITA), 1961: A federal law enacted for the collection of income tax from corporate bodies by the federal government through the agency of the Federal Board of Inland Revenue (FBIR); iv. Income Tax Management Act (ITMA), 1961: known as the principal Act, enacted to bring some uniformity to the taxation of personal income in Nigeria as a whole, particularly in the areas of rates of tax, types of reliefs, and quantum of reliefs. The uniformity notwithstanding, this tax was administered by the regions and used to drive development within the region; v. Personal Income Tax Lagos Act (PITLA) 1961: Which dealt with the taxation of residents of the federal territory of Lagos, the armed forces, the police, officers in the foreign service and non-residents. However, with the creation of Lagos state in 1967 along with eleven other states, PITLA was simply adopted by the new Lagos state while the Federal Government enacted the income tax (Armed Forces and Other Persons) (Special Provisions) Act No. 50 of 1972 to accommodate the categories of people who had been automatically removed from the tax jurisdiction of Lagos as a State. The Federal territory as well as mobile workers had always been treated differently. In 1979, Lagos State Inland Revenue Department (LSIRD was established. This was followed by the establishment of the Company Income Tax Act (CITA) 1979 by the Federal Government. Oriakhi et al (2014) opined that “the tax reform of the 90s was preceded by the inauguration of two study groups. The first study group with respect to direct tax was inaugurated on the 9th of January, 1991. The group was assigned to take a critical examination of the Nigeria‟s tax system since independence, evaluate the possible changes that have been made and assess the effectiveness of the system and proffer necessary recommendations. The second group was inaugurated on the 20th of April, 1991 and was assigned to assess the indirect tax regime of Nigeria”. Ogbonna and Ebimobonee (2012) noted that “the major outcome of the study was the shift from foreign trade activity towards consumption-based tax. To this extent the Value-Added Tax (VAT) came into existence by decree 102 of 1993, but its implementation started from January 1994”. VAT replaced the sales tax, which has been in existence since 1986. It is a consumption-based tax imposed on both domestic and imported goods. However, several items such as food items, medical and pharmaceutical product, books, newspapers, magazine, spare parts including services rendered by community and people‟s banks were VAT-free (Odusola, 2006). The Joint Tax Board (JTB) was instructed to publish a list of various taxes at each of the government‟s level. Further, sub-national governments were prohibited from using ad-hoc tax administrators. The tax elements reviewed include: I. The Companies Income Tax Act (CITA) Cap. 60 Laws of the Federation of Nigeria (LFN) 2004 and the Companies Income Tax Amendment Act 2007- administered by the Federal Inland Revenue Service (FIRS); II. The Petroleum Profit Tax Act (PPTA) LFN 2004; III. The Personal Income Tax Act (PITA) LFN 2004 – this codified all Personal Income Tax legislations into one uniform PITA, with the Joint Tax Board (JTB) consisting of the chairman of the FIRS as the chairman of the JTB and one member from each state being a person experienced in income tax matters, to amongst others, “use its best endeavours to promote uniformity both in the application of the Act and in the incidence of tax on individuals throughout Nigeria”; IV. The Taxes and Levies (Approved List for Collection) Act 1998 - to address the issue of clarifying and delineating responsibilities between the federal, state and local government authorities; V. The VAT Act (VATA) LFN 2004 and the VAT Amendment Act 2007 – introduced the Value Added Tax (VAT) and significantly moved the country into the regime of indirect and consumption tax; it also repealed the Sales Tax Act no. 7 of 1986 administered by some States in a move to improve the overall revenue base of the country and achieve improved efficiency in administration – This tax is administered by the Federal Inland Revenue Service; VI. The Education Tax (ET) Act LFN 2004 – a special tax on corporate income specifically to fund the upgrading of infrastructure and facilities in the education sector; VII. The Capital Gains Tax Act LFN 2004 – administered by the FIRS and the State Internal Revenue Service (SIRS) as specified; VIII. The Stamp Duties Act LFN 2004 – administered by the Federal Inland Revenue Service and the State Internal Revenue Service as specified; IX. The Nigerian Technology Development Agency Act 2007 – introduced a 1% technology tax on selected companies – administered by the FIRS; and X. The Federal Inland Revenue Service Establishment Act (2007) – laws regulating the administration of the FIRS and granting it autonomy. On April 7, 2012 the national tax policy document was launched by President Goodluck Jonathan. Summarily, some of the salient provisions of the national tax policy are: the provision of a stable preference point for all stakeholders in the country on which they shall be held accountable, shifting the focus of the tax system from direct to indirect tax that is considered less distortionary, reducing the Personal Income Tax (PIT)by the introduction of a new framework of consolidated relief allowance as well as different tax rates on taxable income and Company Income Tax (CIT)and VAT remained at 30 percent and 5 percent respectively, avoiding internal multiple taxation on income, property, imports, production and turnover by the various tiers of government, reducing and streamlining the number of tax incentives in the Nigeria tax system, collection of taxes only by career administrators that are public servants, thereby prohibiting the use of ad-hoc tax administrators, vesting of the power to impose, reduce, increase, review or cancel any rate of tax on the National Assembly, especially with respect to taxes from the executive, subjecting the Nigeria‟s tax system to comprehensive reviews every three years pertaining to existing tax legislations. 2.1.4 The Nigerian tax system The tax system in Nigeria is made up of the tax policy, the tax laws and the tax administration. All of these are expected to work together in order to achieve the economic goal of the nation. According to the Presidential Committee on National tax policy (2008), the central objective of the Nigerian tax system is to contribute to the well being of all Nigerians directly through improved policy formulation and indirectly though appropriate utilization of tax revenue generated for the benefit of the people. In generating revenue to achieve this goal, the tax system is expected to minimise distortion in the economy. Other expectations of the Nigerian tax system according to the Presidential Committee on National tax policy (2008) include; • Encourage economic growth and development. • Generate stable revenue or resources needed by government to accomplish loadable projects and or investment for the benefit of the people. • Provide economic stabilization. • To pursue fairness and distributive equity • Correction of market failure and imperfection. In an attempt to fulfil the above expectation, the national tax policy is expected to be in compliance with the principle of taxation, the drive to effective tax system. The Nigerian tax system has been flawed by what is termed multiplicity of tax and collecting entities at the three tiers of government levels; Federal, State and Local government (Ahunwan, 2009). 2.1.5 Tax administration in Nigeria According to Bariyiman and Gladson (2009), tax administration in Nigeria is carried out by the various tax authorities as established under the relevant tax laws. “Tax authority” as defined in section 100 of the Personal Income Tax Decree, 1993 and amended by Decree No 18-finance Miscellaneous Taxation Provisions) Decree 1998, means “the Federal Board of Inland Revenue, the State Board of Internal Revenue or the Local Government Revenue Committee”. The tax authority as defined in addition to the Joint Tax Board, the Joint State Revenue Committee and the Body of Appeal commissioners together constitute the organs of tax administration in Nigeria. • The Federal board of inland revenue Oluba (2008), the Federal Board of Inland Revenue through its operational arm, the Federal Inland Revenue Service, deals with corporate bodies as well as Personal Income Tax for certain categories of individuals Viz: members of the Armed forces, the Nigeria Police, residents of the federal capital Territory Abuja, External Affairs officials and non-resident individuals. This is the body established by the federal government and it is vested with the power to administer the act and to carry out all acts which may be deemed necessary and expedient of the assessment and collection of tax and shall account for all amount so collected in a manner to be prescribed by the Federal Ministry of Finance. The Board as certain reserved to powers which it shall not delegate to other person to perform e.g. power to acquire , hold and dispose of property of any company in satisfaction of tax or any judgment debt, power to satisfy forms of return , claims and notice. All taxes collected by the Federal Inland Revenue Service go to the federal government. • The state board of internal revenue Oluba (2008) posited that the State Board of Internal Revenue through its operational arm, the State Internal Revenue Service collects taxes from individuals and partnerships resident in the states. Taxes collected go to the state government. The Local Government Revenue Committee collects specified rates, levies and fees from individual and businesses located in the local government area. • The joint tax board Since each state has its Internal Revenue Board to oversee Personal tax administration and collection, a central body is desirable to resolve conflicts which may arise between states as to residence of individuals and therefore income tax claims. This responsibility is on a body called The Joint Tax Board (JTB). This is the body created under the section 27(1) Income Tax Management Act 1961 as amended. Its primary function under Personal Income Tax Decree PITD (1993) is to coordinate and promote unity in the application of tax laws at the federal and state level. The Joint Tax Board (JTB) is headed by the executive chairman of Federal Board of Inland Revenue who also act as the chairman of the board. All the state of federation must nominate a member via the commissioner responsible for income tax of the state. Usually, the chairmen of the State Inland Board of Revenue represent their respective states. The secretary to the board who should not be a member to the board is to be nominated by the Federal Public Service Commission. He must be an experienced senior officer in income tax matters. Another member who should always be in attendance in JTB meeting is the adviser for the board. However, the JTB is, thus the apex unifying body for all tax authority in Nigeria. Specifically, the problems common to and disputes arising among tax authorities are dealt with by this board which has been established, among other things, to act as the adjudicating body. 2.1.6 Problems of tax administration in Nigeria According to Soyode and Kajola (2006) problems of tax administration in Nigeria are as follows: Tax evasion: Tax evasion is a deliberate and wilful practice of not disclosing full taxable income so as to pay less tax. In other words, it is a contravention of tax laws whereby a taxable person neglects to pay the tax due or reduces tax liability by making fraudulent or untrue claims on the income tax form. Tax is evaded through different methods some of which include the following: Refusing to register with the relevant tax authority; Failure to furnish a return, statement or information or keep records required; Making an incorrect return by omitting or understating an income liable to tax refusing or neglecting to pay tax; Overstating of expenses so as to reduce taxable profit or income, which will also lead to payment of less tax than otherwise have been paid; A taxpayer hides away totally without making any tax return at all and entering into artificial transactions. Tax avoidance: Tax avoidance has been defined as the arrangement of tax payers’ affairs using the tax shelters in the tax law, and avoiding tax traps in the tax laws, so as to pay less tax than he or she would otherwise pay. That is, a person pays less tax than he ought to pay by taking advantage of loopholes in a tax levy. Tax can be avoided in various ways: Incorporating the tax payer’s sole proprietor or partnership into a limited liability company; the ability to claim allowances and reliefs that are available in tax laws in other to reduce the amount of income or profit to be charged to tax. Minimizing the incidence of high taxation by the acquisition of a business concern which has sustained heavy loss so as to set off the loss against future profits; Minimizing tax liability by investing in capital asset (for instance through the new form of corporate financing by equipment leasing), and thus sheltering some of the tax payers income from taxation through capital allowance claims; Sheltering part of the company’s taxable income from income tax by capitalizing profit through the issue of bonus shares to the existing members at the (deductible) expenses to the company; Creation of a trust settlement for the benefit of children or other relation in order to manipulate the martinet tax rate such that a high income bracket tax payer reduces his tax liability; Converting what would ordinarily accrue to the tax payer (employee) as income into capital gain (i.e Compensation for loss of office) the advantage of the employer and employee; Manipulation of charitable organizations whose affairs are controlled and dominated by its founders thus taking advantage of income tax exemption; Buying and article manufactured in Nigeria thereby avoiding import duty on imported articles; Avoiding the consumption of the articles with indirect taxes incorporated in their prices e.g. tobacco. 2.1.7 The principles of taxation Adam (1910) maintained in his book “The Wealth of Nations” gave the most important set of principles, which are also known as the “cannon of taxation” which are still accepted generally by tax administrators all over the world. The principles of taxation are outlined below: i. Equity/Equality of sacrifices: Adam Smith maintained in these principles that each tax payer should contribute to the support of government also referred to as “state” as nearly as possible in proportion to his ability to pay. For example 10 to 20 percent of all income above a certain figure, since there are some citizens whose incomes were so low that they were obviously to pay any taxes. Similarly, Musgrave and Peacock (1984) conceived the principles of equity as equal proportion of taxation on every income that is; in principle everyone should pay the same proportion of his income as tax. This means proportional taxation or some percentage on all incomes and therefore rejected progressive taxation i.e (higher tax rates on higher incomes). It also means equal taxation of earned and investment incomes, existing private wealth and capital are exempted, taxation is limited to income only. In the same view, Prest and Barr (1985) said, equal amount per head should be levied. It is obviously much easier to run a system under which everybody pays say ten pounds per head than one which the amount due varies according to economic circumstance. ii. The principle of certainty: This principle asserts that the taxpayer should know how much tax he has to pay, and when it is to be paid. Such information should be adequately accurate and clearly stated by the tax regulations. Thus, neither the amount nor the time of payment should be the subject of arbitrary decisions by the tax officials. iii. The principle of convenience: Taxes should be collected at a time convenient for the taxpayers. For example, the Pay as You Earn income tax on salaries and wages deducted weekly or monthly as the case may be as income is received, is a good example of the principle of convenience. Convenience as a principle of taxation has to do with the enforcement of tax and administration. Eckeston (1983) has said that a good tax should not impose taxes that are impossible to enforce even when people comply to tax laws voluntary, the government should verify the tax payments, if not the tax becomes an invitation to break the law. Adam (1910) has pointed out that every tax ought to be levied at the time or in the manner in which it is likely to be convenient for the contributor to pay it. Using this principle as an example, one can argue that the convenient time for payment of tax for West African farmers is during the harvest time. iv. The principle of economy: The principle emphasizes that the cost of assessing and collecting a tax should be small in relation to the revenue so collected i.e. economy should be the yardstick so that the cost of collecting tax should not be excessive. For example, if the expenses incurred in the course of collecting a tax exceed even 50 percent of the yield, then such taxes do not conform to the principle of economy. 2.1.8 Objectives of taxation Although the tax structure in the various developing countries differs widely, the objectives of taxation in these countries are virtually the same. Unfortunately however, the objectives of the tax system and the relationship between these objectives are hardly clearly stated (Cutt, 1969). This does not only makes tax administration difficult but also give room for tax evasion with the attendant effects on economic development. Cutt (1969) therefore, state that a brief discussion on the objectives of taxation as outline below would be a gainful exercise. i. Raising of revenue: The classical function of a tax system is the raising of the revenue required to meet government expenditure. This income is required to meet the expenditure which is either the provision of goods and services which members of the public cannot provide such as defence law and order to the provision of goods and services which the federal and state governments feel are better provided by itself such as health services and education. ii. Wealth redistribution: In modern times, great emphasis has come to be placed on the objective of redistribution of wealth. This has two quite distinct forms. The first is the doctrine that taxation should be based on ability to pay and is summarized by the saying that “the greatest burdens should be borne by the broadest backs.” The second form presupposes that the present distribution is unjust and concludes that this should therefore be undone. This second principle sees confiscation as a legitimate objective of taxation. iii. Economic price stability: It has been said that the most fundamental reason a government has for taxing its citizens is to provide a reasonable degree of price stability within the nation (Summerfield, 1980). Most spending by the public and private sectors without taxes generates high demand, which is inflationary. In such a situation, the basic function of taxation is to reduce private expenditure in order to allow government to spend without causing inflation. Thus, taxation is basically a deflationary measure. On the other hand, when aggregate demand is lower than the deserved level, government has two options which are to increase government spending with increasing taxes or to reduce taxes while leaving government spending stable. iv. Economic growth and development: The overall control or management of the economy rests on the central government and taxation plays an important role in this direction. In addition to maintaining reasonable price stability, governments are determined to promote the near-full employment of all the resources of the country (including human resources i.e. labour) and ensure a satisfactory rate of economic growth. Economic growth and development programmes are geared towards raising the standard of living of the masses of a country through the improvement of their economic and social conditions. Taxation in one way discourages, postpones or reduces consumption and encourages saving for private investments. This is only possible when the basic necessities of life including security, law and order, education and communication are provided by government, hence, the national development plans of developing countries are considered to be important. This objective will be of great assistance to Nigeria where there is mass unemployment of labour force and economic resources. According to Soyode and Kajola (2006) the responsibilities or objectives of government using taxation are as follows: • Revenue generation: The primary objective of a modern tax system is generation of revenue to help the government to finance ever-increasing public sector expenditure. • Provision of “Merit Goods”: An important objective of tax system is the promotion of social, economic and good governance through provision of merit goods. Examples of merit goods are health and education. These must not be left entirely to private hands though, private participation should be encouraged. Private enterprises will push the cost of providing education and health services beyond the reach of common people if left entirely in their hands. • Provision of “Public Goods”: Provision of commonly consumed goods and services for which an individual cannot be levied the cost of the goods or services consumed are one of the functions of government. Examples of public goods include: Internal security through maintenance of law and order by police and other security agencies; External security through defence against external aggression by Army, Navy and Air Forces, and Provision of street lights and roads. • Discouraging consumption of “Demerit Goods”: Tax can be used to discourage consumption of demerit or harmful goods like alcohol and cigarette. This is done to reduce external costs to the society. These external costs include health risks and pollution. • Redistribution of income and wealth: Tax system is a means of ensuring the redistribution of income and wealth in order to reduce poverty and promote social welfare. For example, taxation can be used as economic regulator for promotion of economic stability and sustainable growth through fiscal policy. Government also has responsibility for fighting inflation, unemployment and creating a sound infrastructure for business. A tax system is one of the means of achieving this. • Harmonization of economic objective: Harmonization of diverse trade or economic objectives of different countries is one of the modern objectives of tax systems. For example, tax system can be used to achieve the philosophy of the single market in ECOWAS or Africa so as to provide for the free movement of goods/services capital and people between members states. 2.1.9 Nigeria’s major taxes In order to avoid multiple collections of taxes from the same taxpayer, at least in theory, taxes of each tier of government in Nigeria have been clearly defined by the Joint Tax Board (JTB) as follows: i. Federal taxes: Federal Taxes includes: Companies Income Tax, Custom and Excise Duties, Value Added Tax, Education Tax. Personal Income Tax in respect of: Armed Forces, Police, Non resident individuals and companies, Staff of Nigeria Foreign Service and Individuals resident in the Federal Capital Territory. ii. State taxes: Personal Income Tax, Road Taxes, Pools betting and lotteries, Business premises registration, Development Levy, Naming of street registration in state capitals, Right of occupancy on land owned by state, and Market taxes on state financed taxes. iii. Local government taxes: Shops and Kiosks rates, Tenement rates, On and off liquor license fee, Slaughter slab fees, Marriage, Birth and death Registration Fees (Rural Areas), Right of Occupancy on land in rural areas, Market Taxes and Levies, Motor Park Levies, Domestic Annual License Fees, Bicycle, Truck, Canoe, Wheelbarrow, and Cart Fees, Cattle tax payable by cattle farmers only, Merriment and Road Closure Levy, Radio and Television License Fees (other than radio and television transmitter), Vehicle Radio License (Local Government Registration of the vehicle), Wrong Parking Charges, Public Convenience and Refuse Disposal, Customary burial ground permit fees, Religious Place Establishments Permit Fees and Signboard and Advertisement Permit Fees. 2.1.10 Economic growth and tax revenue In Nigeria, Naiyeju advised that in removing the regulated key sector of the economy and improving tax collection could improve government's revenue base. He also advised Federal Government to hand off the exploration of mineral resources in the country to encourage more private sector participation. Irrespective of these views, Minister of Finance Kemi Adeosun assured Nigerians that the Federal Government's drives for enhanced revenue generation would not be a burden to Nigerians. The minister said that the revenue focus would not burden Nigerians but will ensure that all revenue due to Nigeria's government, irrespective of the source, was collected with a high degree of efficiency. She expressed the determination of the Federal Government to work with the private sector when necessary to maximize the nation's revenue potential. The ease of doing business has been cited as one of the key drivers of economic growth and Nigeria has already set target for improvement of this regard. 2.1.11 Petroleum profit tax and Nigeria economic growth The Petroleum Profit Tax is regulated by the Petroleum Profit Tax Act (PPTA).It is under the administration of the federal Inland revenue board and the tax is on profits of companies engaged in petroleum operations. The Act defined Petroleum operation as " the winning or obtaining and transportation of petroleum or chargeable oil in Nigeria by or on behalf of a company for its own account by any drilling, minning, extracting or other like operations or process, not including refining at a refinery, in the course of a business carried on by the company engaged in such operations. Adereti (2020) explained that the taxable income of a petroleum company is subject to tax at 85%, but this percentage is lowered to 65.75% during the first 5years of operation but where oil companies operate under production sharing contracts. They will be liable to tax at a rate of 50%. This makes the foreign trade sector the major source of revenue in the 1960's. Some structural changes emerged in the revenue profile in the early 1970's whereby indirect taxes gave way to direct taxes with the emergence of the oil boom. The fall in non-oil tax revenue due to the neglect of the traditional ( agricultural) sourcey was matched by an increase in import dutiy until 1973. This overall picture has been sustained up till now given the dominant role of the oil sector as major source of government revenue. This scenario appears to conform to musgrave's (1969) theory to the effect that as an economy develops, more reliance may be placed on direct tax revenue. Some caution is advisable in confirming the relevance of musgrave's theory to the Nigerian environment. Odusola (2021) documented that Petroleum Profit Tax (PPT) is a tax applicable to upstream operations in the oil industry. He continued that (PPT) is particularly related to rents, royalties, margins and profit sharing elements associated with oil mining prospecting and exploration leases. According to the definition of the petroleum exploration, development, production and sale of crude oil. The importance of Petroleum Profit Tax (PPT) to Nigeria's economic growth cannot be over emphasized Ogbonna (2021) pointed that Nigeria's petroleum industry constitutes a vital source of revenue to the government, and occupies a strategic position in the economic growth of Nigeria. 2.1.12 Value added tax (VAT) and Economic growth in Nigeria Valued Added Tax (VAT) is a consumption tax that is imposed on any purchase of goods and services. A tax been paid on consuming a particular product. Okoye and Ani (2021), defined Valued Added Tax as an indirect form of taxation based on the general consumption behavior of the people. Margaret Charles and Gift (2021) believed that the impressive performance of Valued Added Tax in all the countries it was introduced actually influenced the decision of the government to introduce Valued Added Tax (VAT) in Nigeria in 1994. The federal Inland Revenue Service (FIRS) documented that VAT, which replaced the old sales tax, is a consumption tax which is relatively easy to administer, easy to collect and difficult to evade, this bringing an increase in government revenue thereby helping Nigeria's economic growth. The FIRS is responsible for the administration of Valued Added Tax (VAT) in Nigeria. 2.1.13 Company income tax and economic development in Nigeria According to Ani (2021) Company Income Tax (CIT) is a direct tax levied on the profits of companies. Company Income Tax is derivable from the taxable profits of companies which are incorporated under the companies and Allied Matters Act, 1990 as amended till date or any other law that may replace it dealing with the incorporation of companies. Company Income Tax (CIT) is payable upon profits of any company accruing in , derived from, brought into, or recieved in Nigeria in respect of any trade or business that may have been carried out currently, the rate of Company Income Tax is 30% of assessable profit. Dickson and Rollie (2021) postulate that government often use Company Income Tax incentives such as tax exemptions to attract and retain local and foreign investors to engage in productive activities thereby increasing economic growth and also influence a favourable balance of payment with other countries since companies income tax is progressive ( the higher the earnings, the higher the Company Income Tax), it encourages the economic growth. Nigerian economy, they conclude that company income tax is a major source of revenue in Nigeria but non-compliance with tax laws and regulations by tax payers is deep in the system because of weak control. There is the need for a general tax reform in the Nigerian company income tax system. 2.14 Taxation and economic growth in Nigeria Gross Domestic Product (GDP) remains one the yardsticks for measuring economic developmentof any country and indeed Nigeria. However,some authors hold different views about GDP as a predominant measure of development. Manish and Andre (2020) argued that the frequent application of GDP as a Substitute for measuring economic growth is majorly due to easy quantification of manufactured goods and activities than a multi-dimensional index can measure other welfare achievement. 2 .2 Theoretical framework 2.2.1 Socio-political theory (Bhartia 2020) This postulates social and political objective as paramount indicators in sellecting taxation politicies. It discourages tax policy and planning arrangement based on individuals consideration and benefits rather than the curing the problems of the public. The theory advocated that a tax system should not be designed to serve individuals, but should be used to cure the ills of society as a whole. 2.2.2 Expediency theory (Bhartia 2020) This theory emphasizes that each scheme must exhibit reasonableness and should be the main evaluation the government uses in sellecting a tax plan. This theory affirms that every tax proposal must pass the test of practicality. It must be the only consideration weighing with the authorities in choosing a tax proposal. Bhartia (2020) explained that the expediency theory is based on a link between tax liability and state activities. It assumes that the state should charge the members of the society for the services provided by it. Thus reasoning justifies imposition of taxes for apportioning the tax burden members of society. This proposition has a truth in it, since it is useless to have a tax which can not be levied and collected efficiently. Accordingly, a tax system should not be designed to serve individual members of the society, but should be used to cure ills of society as a whole. This theory related to a normal development process and represents a benchmark against which country specific empiriyevidence may be compared. This theory therefore focuses on the expediency theory which enables us to assess the extent to which the Nigeria tax system conforms to the scenario where the link between tax liability and economic activities are linked. This theory also focuses on the fact that taxes are collected to achieve economic objective which enhances the growth and development of a society in all it's spheres. They lay more emphasis on political, relationship and ability to be objectives. 2.3 Empirical framework Many empirical studies have been carried out on the contribution of taxes to government revenue generation and Nigeria economic growth for instance, Etim et al.,(2021) using a descriptive and inferential statistical technique, correlational and regression statistics, and an ex post facto research design, the study compared the effects of direct and indirect taxation on the growth of the Nigerian economy. The study demonstrated that indirect taxes have a greater detrimental impact on economic growth. Mukolu and ogodor's(2021) study examined the impact of Value Added Tax (VAT) on the Nigerian economic growth for the year 1994 till 2018 using an Augment Dickey Fuller Analysis Method. Data gotten from central bank of Nigeria statistical bulletin and Federal Inland Revenue Service. The study showed that there is a positively significant impact of Value Added Tax on Gross domestic product. It also showed that VAT has to a great extent given rise to the total revenue of the nation and has helped in tax evasion by tax payers. John and Dickson (2020) using Error Correction Models analysed the influence of tax revenue on economic growth using unadjusted and adjusted Gross domestic product GDP from 1984 to 2018. When GDP was not adjusted for inflation, Petroleum Profit Tax (PPT) had a minor but beneficial effect on economic growth whereas Value Added Tax (VAT) and Company Income Tax (CIT) had a large but negative impact on Gross domestic product (GDP). Personal Income Tax (PIT) had a negative and insignificant impact on adjusted Gross domestic product(GDP), but Value Added Tax (VAT) had a positive and considerable impact, and Company Income (CIT) Tax had a negative and significant one. Ewa and Kase (2021) examined the contribution of tax revenue on the economic growth of Nigeria. The first objective of this study was to examine the contribution of Petroleum Profit Tax (PPT) on economic growth of Nigeria, the second was to examine the contribution of Valued Added Tax (VAT) on economic growth in Nigeria and the third was to ascertain the contribution of Company Income Tax (CIT) on economic growth in Nigeria. The study used secondary source of data. These data were time series,and data was collected from CBN statistical bulletin and federal Inland Revenue Service. The study covers the period from 1997 to 2016. Ordinary least square of multiple regression models was used to ascertain the contribution of independent variables on dependent variable. The findings revealed that there is a significant contribution of Company Income Tax (CIT) and Valued Added Tax (VAT) on the economic growth of Nigeria. The finding also revealed that there is no significant contribution of Petroleum Profit Tax (PPT) on the growth of the Nigeria economy. Yadawananda and Achal (2020) investigated long-run and short-run relationship between tax structure and state-level growth performance for the year 1991 till 2016 using the panel regression method. The findings revealed that commodity and service tax were bad for the economy and an increase in those taxes will lead to inflation while income taxes were found to be significant for the economy as it mostly impacts the savings and labour supply which is regarded as the drive for economic growth. Adeusi et al.(2020) investigated the impact of non-oil revenue for the period 1994-2018 with data gotten from Federal Inland Revenue Service and National Bureau of statistics. Ordinary least square regression technique was used for data analysis. The study revealed that Value Added Tax (VAT) and Custom & Excise Duties have more significant positive impact on economic growth which Company Income Tax (CIT) and Petroleum Profit Tax (PPT) have a negative but significant effect on economic growth. Edame and okoi (2020) analysed the impact of taxation on investment and economic growth in Nigeria. The study aimed at examining the effect of taxation on investment and economic growth in Nigeria from 1980 to 2000. Secondary source of data was collected from (CBN) Central Bank of Nigeria, statistical bulletin and NBS was used . The variables were tested using regression analysis. Findings showed that taxation was negatively related to the level of investment and GDP is positively related to government expenditure in Nigeria. The paper recommended that the government of Nigeria should effectively use taxation to achieve it's set objectives that will achieve economic growth and development. Emmanuel (2019) used secondary data from the central bank of Nigeria, statistical bulletin in several editions to look at tax income and the Nigerian economy from 2000-2017. They conducted the research using after the fact design. The statistical analysis were performed using the ordinary least square (OLS) regression approach. During the course of their analysis, their findings demonstrated that tax revenue had a little impact on economic growth. CHAPTER THREE METHODOLOGY 3.1 Research design The aims and hypothesis for this study were planned to be addressed. The theoretical underpinnings of the research issue and previous research methodology utilized to examine various facets of taxation and economic growth in Nigeria were established through a review of the literature. Ex-post facto research strategy was used in this study to establish a link between the dependent and independent variables using data that was already collected. The data gathered in the study were analysed using an econometric model, and empirical technique was applied. 3.2 Selection of data The data of this study were obtained mainly from secondary sources i.e with the use of journals, handprints an newspapers to obtain literatures in the work. 3.3 Collection of data The data of this study were collected from the Federal Ministry of Finance, Central Bank of Nigeria statistical bulletin, office of the Accountant General of the federation and National Bureau of statistic reports for 2000 to 2022.. 3.4 Operational measure of variable Based on the hypothesis of this study, In hypothesis 1, the dependent variable is gross domestic product in Nigeria while the independent variable is value added tax. In hypothesis 2, the dependent variable is gross domestic product in Nigeria while the independent variable is company income tax In hypothesis 3, the dependent variable is gross domestic product in Nigeria, while the independent variable is petroleum profit tax 3.5 Data analysis technique The data analysis technique used in this study are the regression analysis and the ordinary least square techniques. The regression analysis was employed to establish the relationship between dependent and independent variables. The ordinary least square techniques were employed in obtaining the numerical estimates of the co-efficient in different equation in the model. This study also made use of econometric approach in establishing the relationship between tax revenue as represented by various taxes and economicdevelopment as gross domestic product in Nigeria 3.6 Model specification In the hypothesis of this study, human development index in Nigeria is expressed as a function of value added tax. GDP=f(VAT,CIT, PPT,)………………………………………….. i Where; GDP= Gross domestic product VAT = Value added tax CIT= Company income tax PPT= Petroleum profit tax The relationship expressed in equation form is GDP = a + b1VATt +b2CITt+ b3PPTt+ Ut………… ii. Where; b1, b2, b3> 0 Table 3.1 Table showing explaining variable Variable Formula Description Dependent variable GDP CBN bulletin Gross domestic product of Nigeria Independent variable : Petroleum profit tax FIRS WEBSITE Total revenue generated from petroleum Company income tax FIRS WEBSITE Total 30% tax generated from registered companies in Nigeria Value added tax FIRS WEBSITE 7.5% of valued tax from bills generated CHAPTER FOUR DATA PRESENTATION AND ANALYSIS 4.1 Data presentation Data for the variables of the dependent and independent variables are presented in tables below. We also present the results of the empirical analysis in this section. Table 4.1: Data for research variables YEAR VAT(Nb) CIT (Nb) PPT (Nb) GDPGR (Nb) 2000 58.5 51.5 525.07 5.02 2001 91.8 68.7 639.23 5.92 2002 108.6 89.1 392.21 15.33 2003 136.4 114.8 432.6 7.35 2004 159.5 113 878.63 9.25 2005 178.1 140.3 1,352.24 6.44 2006 221.6 244.9 1,349.52 6.06 2007 289.6 275.3 1,132.04 6.59 2008 401.7 420.58 2,060.88 6.76 2009 481.4 600.59 939.412 8.04 2010 564.89 666.13 1,480.36 8.01 2011 659.15 684.746 3,070.59 5.31 2012 710.56 807.541 3,201.32 4.23 2013 802.68 967.317 2,666.37 6.67 2014 802.96 967.58 2,453.95 6.31 2015 635.35 1404.377 1,289.96 2.65 2016 828.2 1791.4 1,157.81 -1.62 2017 972.35 1704.33 1,520.48 0.81 2018 1108 1,669.32 2,467.58 1.92 2019 1188.58 1,708.50 2114.268 2.21 2020 1,628.30 1,767.88 1516.993 -1.79 2021 459.59 1476.87 2,008.45 3.65 2022 2051.02 2083.01 2389.87 3.1 Table 4.2 presents the regression result on the relationship between growth in GDP and tax in Nigeria. Table 4.1: Regression results for the model Source: STATA 17 Output, 2023 4.2 Data analysis The overall fitness of the models is shown by the Adjusted R-squared value of the model 0.54. The R-squared values show that the independent variables explain only about 54% of the variations in the dependent variable GDPGR. The overall significance of the model is shown by the p-values 0.000 showing that the model is significant at 1% level. 4.3 Test of hypotheses In this section, the hypotheses formulated in their null forms to guide the research were tested for acceptance or rejection. These hypotheses will be tested using the t-statistic of the regression results presented in table4.2. Decision rule Accept Ho: if p-value of t-statistic is ≥ 0.05 alpha level Reject Ho: if p-value of t-statistic is ≤ 0.05 alpha level 4.3.1 Test of hypothesis one Ho1: Value added tax has no significant impact on gross domestic product in Nigeria. From table 4.2, the regression coefficient (0.54) for debt financing is negative and non-significant (p = 0.595> 0.05). The null hypothesis (Ho1) is not rejected, and the researcher concludes that value added tax is not significantly associated with gross domestic product.The result suggests that increase in value added tax is not directly associated with improvement gross domestic product in Nigeria. 4.3.2 Test of hypothesis two Ho2: Petroleum profit tax has no significant impact on gross domestic product in Nigeria. From table 4.2, the regression coefficient (0.20) for debt financing is negative and non-significant (p = 0.841> 0.05). The null hypothesis (Ho2) is not rejected, and the researcher concludes that petroleum profit taxis not significantly associated with gross domestic product. The result suggests that increase in petroleum product tax does not result in improvement in gross domestic product.