Tax Revenue and Socio-economic Performance in Nigeria

Abstract

The study examined the effect of tax revenue on socio-economic performance in Nigeria between 1981 and 2020, the primary purpose of this study was to examine the effect of tax revenues on the socio-economic performance of Nigeria. The expo-factor research design was adopted for this study and the analysis was carried out using descriptive and broad econometric techniques. The analysis started with exploring the trends in each variable using line graphs after which descriptive statistics were used. Both the Autoregressive Distributive Lag (ARDL) and Dynamic Error-Correction Model (ECM) econometric models were estimated. Other relevant pre-estimation diagnostic tests (normality, serial correction, heteroscedasticity and unit roots) were satisfactory. Succinctly, the study found that tax revenue from Customs and Excise Duties (CED) showed a positive and significant influence on basic school enrolment and life sustenance. Also, current period company income tax revealed a negative influence on basic school enrolment but positive on life sustenance. Whereas, petroleum profit tax exhibited a positive influence on life sustenance and basic school enrolment. The study also confirms the existence of long-run relationship among the variables. Therefore, we conclude that the selected tax revenue components examined have the potential to spur a considerable improvement in socio-economic indicators of Nigeria. Consequently, the study put forward that the government should improve on channeling tax revenue receipts towards improvement in livelihood and the overall socio-economic condition of the Nigeria economy.