Effect of Tax System on Productivity in Nigeria
Abstract
This study investigated the effect of tax system on productivity in Nigeria for the period 1994-2023. The specific objectives are to: determine, examine and explore the effects of direct tax system, indirect and total tax revenue respectively, on productivity in Nigeria. Ordinary Least Square (OLS) method of data analysis was adopted because of its Best Linear Unbiased Estimators (BLUE) properties. The independent variable is proxied by direct tax, indirect tax and total revenue, while productivity is the dependent variable and all data were sourced from the Central Bank of Nigeria Statistical Bulletin. The study adopted the descriptive statistics approach, as well as Error Correction Mechanism to analyses the corrected data. The study concluded that the tax system had significant and positive effect on productivity in Nigeria. Precisely, direct tax and total tax revenue had positive and significant effect on productivity in Nigeria while Indirect tax had non significant effect on productivity in Nigeria; The study recommends that: Government should boost direct tax revenue by identifying and eradicating all administrative loopholes for direct tax revenue in order to contribute meaningfully to the improvement of the quality of life in Nigeria. The value added tax (VAT), should be imposed on ostentatious consumption to make it progressive instead of overly taxing goods that are consumed by the poor and middle class.
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