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Impact of Tax Reforms and Economic Growth of Nigeria: A Time Series Analysis

Author(s): G.N. Ogbonna | Appah Ebimobowei

Journal: Current Research Journal of Social Science
ISSN 2041-3238

Volume: 4;
Issue: 1;
Start page: 62;
Date: 2012;
Original page

Keywords: Causality | co-integration | economic growth | Nigeria | tax | tax reforms

The study examines the impact of tax reforms on the economic growth of Nigeria from 1994 to 2009. To achieve the objective of the study, relevant secondary data were collected from the Central Bank of Nigeria (CBN) Statistical Bulletin, Federal Inland Revenue Service (FIRS), Office of the Accountant General of the Federation, and other relevant government agencies. The data collected were analysed using relevant descriptive statistics and econometric models such as White test, Ramsey RESET test, Breusch Godfrey test, Jacque Berra test, Augmented Dickey Fuller test, Johansen test, and Granger Causality test. The results from the various test shows that tax reforms is positively and significantly related to economic growth and that tax reforms granger cause economic growth. On the basis of the findings, the study concluded that tax reforms improves the revenue generating machinery of government to undertake socially desirable expenditure that will translate to economic growth in real output and per capita basis. However, it was recommended that sustainable economic growth cannot be attained with tax reform processes except obsolete tax laws and rates are reviewed in line with macro economic objectives, corrupt-free and efficient tax administrative machinery with personnel’s and accountability and transparency of government officials in the management of tax revenue.

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