Tax Revenue and Macroeconomic Stability in Nigeria: 1991 -2024

Abstract

This study examined the effect of tax revenue on macroeconomic stability in Nigeria. Specifically, the study examined the effect of tax revenue on Gross Domestic Product. Ascertain the effect of tax revenue on price stability. The study employed econometric techniques, including Descriptive Statistics, Augmented Dicker Fuller tests for unit roots, the Autoregressive Distributive Lag (ARDL). The study revealed that tax revenue has (65% long run and 73% short run) significant policy effects on gross domestic product, Tax revenue has 72% significant short run policy effect on price stability in Nigeria. This suggests that tax revenue has not been effective long run policy instruments that can largely influence macroeconomic stability in Nigeria. The study concludes that tax revenue has been effective short run policy instruments that largely influenced macroeconomic stability in Nigeria. Amongst the recommendations is that a moderate increase (to say, 7.5%), would boost government’s profile. Expanding the base of VAT would be a progressive attempt at expansion as it will potentially make the informal sector to pay tax thereby enhancing the nation’s economic growth and stability. The tax authorities in Nigeria should be adequately staffed with qualified and well-motivated personnel to enhance productivity and rid the system of corruption. Government should embark on policies and programmes that will enhance the level of income of the citizens so as to raise the consumption level of the people with a view to accelerating investment, employment, output, and ultimately value added tax .