The Effect of Revenue from Taxation on Gross Domestic Product and Human Development Index in Nigeria

Abstract

Aims: This study investigates the effect of revenue from taxation on gross domestic product and human development index in Nigeria. Secondary data is used from the Central Bank of Nigeria, the World Bank, and Federal Inland Revenue Service for this study. Study Design: The Ex-post facto research design was used for the study. Methodology: The study used secondary data and was conducted via the relevant econometric tests. Result: The study reveals that revenues from taxation have effects on gross domestic product and human development index. Based on the result, the study concluded that taxation is an essential component of fiscal policy that the Nigerian government can use to stimulate economic development. Based on the conclusion, the study made the following recommendations amongst others that, government need to improve on the personal income tax collection process to enable more individuals disclose their income for tax assessment. This is because most self employed (skilled workers such as carpenters, bricklayers, welders, etc) Nigerians don’t pay income tax voluntarily. There should be an improvement in the value added tax administration in Nigeria to reduce the lack of accountability of VAT by the agents. The tax officials and other agents of the relevant tax authorities need to reduce their fraudulent activities with tax payers to increase the amount of tax collected for the economic growth of Nigeria.