Impact of Tax Revenue on Economic Development:
Nigeria's Empirical Investigation (2000 - 2023)
Abstract
This study is on the effect of tax revenue on economic development in Nigeria. Tax revenue is a broad aspect of the economy that encompasses all economic activities that produce and do not produce any physical goods. The study analyzed the effect of petroleum profit tax, company income tax, and valued added tax on human development index. The study employed secondary data in analyzing the nature of the relationship between Tax revenue and Human Development Index. The Ordinary Least Squares (OLS) estimation technique was employed using data from 2000 to 2023 as sourced from the World Development Indicators (WDIs) and Federal Inland Revenue Service (FIRS). The study discovered that petroleum profit tax is, however, not positive and not statistically significant, valued added tax was positive and statistically not significant, and company income tax was negative and was also not significant statistically. As a result of this, the study therefore recommends that since tax revenue alone does not appear to have a significant impact on the human development index in Nigeria, it is important to explore and implement alternative strategies for economic development. Governments at all level should focus on improving tax policy and administration, including reducing tax evasion and improving tax collection mechanisms. This can help increase revenue generation and create a more conducive environment for economic development.
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