THE ROLE OF TAXATION ON REVENUE GENERATION: NIGERIA EXPERIENCE

Abstract

The role of taxation on revenue generation and economic growth cannot be underestimated. It was on this note, this study investigated taxation role on revenue generation in Nigeria. Secondary data was used and sourced from Federal Inland Revenue Service and Central Bank of Nigeria Statistical Bulletin between 2011Q1 and 2020Q4. The study employed descriptive analysis, Regression analysis, ARDL, and VAR as the estimation techniques. The findings showed company income tax, value added tax, petroleum profit tax, revenue generation were stationary after first difference while capital gain tax was stationary at level. VAT contributes positively and significantly on revenue generation, that is, when VAT increases by 1, the revenue generation will increase with the value of 0.688648. Petroleum profit tax revealed a significant positive impact on revenue generation in which an increase in PPT will contribute 0.507721 to revenue generation. Company income tax contributes positively to revenue generation, but it was significant. Capital gain tax exhibited a negative impact on revenue generation significantly during the study period. It was concluded that company income tax contributes more to revenue generation, followed by petroleum profit tax, capital gain tax and value added tax. Meanwhile, in the long run, company income tax also contributes the highest percentage followed by petroleum profit tax, value added tax and capital gain tax. Though, there was an inconclusive relationship between the role of taxation and revenue generation that is, no adequate report whether there is a long-run or short-run relationship