TAX STRUCTURE AND ECONOMIC GROWTH IN NIGERIA: AN AUTO REGRESSIVE DISTRIBUTIVE LAG EVIDENCE FROM 1980 – 2018

Abstract

This study empirically examined tax structure and economic growth in Nigeria for the period 1980 to 2018. The secondary data for the study was obtained from the Central Bank of Nigeria and Federal Inland Revenue Service and econometric model was used in data analysis. The Auto Regressive Distributive Lag (ARDL) test indicated a negative and insignificant relationship between personal income tax and gross domestic product while petroleum profit tax showed a positive and insignificant relationship with gross domestic product. The results further revealed that company income tax has a positive and significant relationship with gross domestic product while custom and excise duties showed a positive and insignificant relationship with gross domestic product. Also government expenditure and trade openness indicated a negative relationship with gross domestic product. The paper concluded that  tax structure dimensions of petroleum profit tax, company income tax and custom and excise duties has a positive effect on economic growth in Nigeria while personal income tax, government expenditure and trade openness showed a negative effect on economic growth.  Therefore, the study recommended amongst others that the Nigerian government should completely re-organize the tax administrative mechanisms in order reduce tolerable problems of tax evasion and avoidance and that of good tax culture by the populace to achieve sustainable economic growth in the country