Optimising Tax Revenue for Economic Growth and Development in Nigeria
Keywords:
Optimising, Tax Revenue
Abstract
The study examined optimisation of tax revenue for economic growth and development in Nigeria using Federal Inland Revenue Service (FIRS) as a case study. Primary data were obtained from 235 copies of questionnaire administered on the staff of FIRS. Secondary data on revenue collection performance from 2012 to 2021 were analysed and compared with real Gross Domestic Product (GDP) statistics for the periods. Hypotheses were tested using regression and correlation statistics. Analysis of Variance (ANOVA) was also used to determine the contribution of both oil and non-oil revenue to the real GDP. The results from the study suggest that structure of tax system and actions of tax officials enhance optimum tax collection. Well implemented tax policies and judicious utilization of tax revenue will encourage voluntary tax compliance. Result of the correlation also indicates that there exists positive significant relationship among Petroleum Profits Tax (PPT) (r = .740*, p (0.014) < 0.05), non-oil tax revenue (r = .995**, p (0.000) <0.01) and Real GDP. The result of the study suggests that optimisation of taxes will break the trend of mono-economy and overreliance on oil. The study recommends amongst others that the existing tax structure should be improved upon, well implemented and incorporating contributions from all relevant stakeholders; and that the existing tax laws should be reviewed into easy-to-read version that eliminates all complexities and ambiguities.
References
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Abiola, J. & Asiweh, M. (2012). Impact of Tax Administration on Government Revenue in a Developing Economy – A Case Study of Nigeria. International Journal of Business and Social Science, 3(8), 99-113.
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Accounting and Taxation Review, 3(1), 82-92.
Adeyeye, G. B. (2019). Improving Tax Administration through Technology
Innovation in Nigeria (A Study of Federal Inland Recenue Service). Annals of
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Adeyeye, G. B., Adeoye, O. A. & Adeyeye, A. M. (2018). Personal Income Tax
Administration in the Rural Communities (A Study of Selected Local
Government Areas in Ogun State, Nigeria). Annals of Spiru Haret University,
Economics Series, 18 (2), 23-52.
Adeyeye, G. B., Otusanya, O. J. & Arowomole, S. S. A. (2016). Honesty, tax fairness,
government’s responsiveness and voluntary tax compliance in Nigeria. Int. J.
Economics and Accounting, 7(4), 326-344.
Adeyeye, G. B. & Ajibolade, S. O. (2016). The Impact of Efficient and Effective Tax Laws and
Tax Policies on Voluntary Tax Compliance in Nigeria. Nigerian Journal of
Management Studies, 16 (1), 45-59.
Adeyeye, G. B. & Adeyemi, S. B. (2015). A Study of the Impact of Efficient and
Effective Tax Administration on Voluntary Tax Compliance in Nigeria.
Accounting Frontier, 6 (1), 39-52.
Agbaeze, E., Udeh S. & Onwuka I. (2015). Resolving Nigerian’s Dependence on Oil – The Derivation Model. Journal of African Studies and Development, 7(1), 1-14.
Ajape, K. M. & Adeyeye, G. B. (2017). Stakeholders’ Perceptions on Value Added
Tax Practice in Nigeria, Unilag Journal of Business, 3 (3), 186-209.
Akintoye, R. & Tashie, G. (2013). The Effect of Tax Compliance on Economic Growth and Development in Nigeria, West-Africa. British Journal of Arts and Social Sciences, 11(11), 222-231.
Aliyu, A. B. & Mustapha, A. A. (2020). Impact of tax revenue on economic growth in
Nigeria (1981-2017). Bullion, 44(4), Article 5, 64-77.
Alli, B. D. (2009). Managing the Tax Reform Process in Nigeria. The Nigerian Accountants, 42(1), 45-51.
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The Survey Research Handbook, (2nd Ed.), Chicago: Irwin.
Asaolu, T. O., Olabisi, J., Akinbode, S. O., and Alebiosu, O. N. (2018). Tax Revenue and
Economic Growth in Nigeria. Scholedge International Journal of Management &
Development, 5(7), 72-85.
Asika, N. (2004). Research Methodology in the Behavioural Sciences (5th Ed.), Ikeja,
Lagos, Longman Nigeria Plc.
Asuquo, R, (2012). Tax Issues in Nigeria: Issues and Challenges. Gauge – A Quarterly
Publication of the Federal Inland Revenue Service. April– June, 2012. ISSN 2066
9677.
Awa, F. N. & Ibeanu R. I. (2020). Impact of Tax Revenue on Economic Development in
Nigeria (1997- 2018). European Journal of Accounting, Auditing and Finance
Research, 8(7), 18-32.
Baridam, D. M. (2008). Research Methods in Administrative Sciences, Port Harcourt:
Sheerbroke Associates.
Bhartia, H. L. (2009). Public Finance. (14th Ed). New Delhi: Vika Publishing House PVT Limited.
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Tax System and Internally Generated Revenue in the Nigerian Emerging Economy:
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Ewoma, D. (2012). The Tax Manual: Principles and practice of taxation in Nigeria. (1st
Ed.). Lagos: Nitty Gritty Press.
Federal Inland Revenue Service (2021). Annual Report and Account.
Federal Inland Revenue Service (2022). FIRS Revenue Collection Performance from
2011 to 2021. FIRS, Planning, Reporting & Statistics Department.
Federal Inland Revenue Service Handbook (2012). Excerpts of the Handbook - Federal Inland Revenue Service and Taxation Reforms in Democratic Nigeria Edited and published in 2012. Retrieved from www.firs.gov.ngon 25th July, 2018.
Federal Inland Revenue Service (Establishment) Act, 2007. Retrieved from http://www.osolakeblog.com/2015/05/federal-inland-revenue-service-establishment-act-2007.html on 24th July, 2018.
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Libabatu, S.G. (2014). Tax Revenue and Economic Growth in Nigeria. An unpublished Master of Science Degree in Accounting and Finance Project submitted to the School of Postgraduate Studies, Ahmadu Bello University, Zaria.
Micah, L., Ebere, C. & Umobong, A, (2012). Tax System in Nigeria – Challenges and the Way Forward. Research Journal of Finance and Accounting, 3(5), 9-15.
National Tax Policy, (2012). Policy Document of Federal Ministry of Finance in Nigeria.
National Tax Policy, (2017). Policy Document of Federal Ministry of Finance in Nigeria.
Nzotta, S.M. (2007). Tax Evasion Problems in Nigeria. A Critique. The Nigerian Accountants, 40(2), 40-43.
Odogu L. I., Obalakumo, P. A., Odoko, D. & Dadowei, O. M. (2021). The Effect of
Revenue from Taxation on Gross Domestic Product and Human Development
Index in Nigeria. Asian Journal of Economics, Business and Accounting 21(6),
1-11.
Odusola, A. (2006). Tax Policy Reforms in Nigeria. Research Paper No. 2006/03, United
Nations University, World Institute for Development Economic Research.
Organisation of Economic Cooperation and Development (OECD) (2012). Development Co-operation Report 2012: Lessons in Linking Sustainability and Development. Paris: OECD Publishing, DOI: Retrieved from http://dx.doi.org/10.1787/dcr-2012-en. on 27th May, 2015.
Ofurum, C. N., Amaefule, L. I., Okonya, B. E. & Henry, C. A. (2018). Impact of e-taxation
on Nigerian’s revenue and economic growth: A pre-post analysis: international
journal of finance and accounting 7(2), 19 – 26.
Ogbonna, G.N. & Appah, E. (2016). Effect of Tax Administration and Revenue on
Economic Growth in Nigeria. Research Journal of Finance and Accounting, 7(13),
49-58.
Ogbonna, G. N. & Appah, E. (2012a). Impact of Tax Reforms and Economic Growth of
Nigeria: A Time Series Analysis. Current Research Journal of Social Sciences, 4(1), 62-68.
Ogbonna, G. N. & Appah, E. (2012b). Impact of Petroleum Revenue and the Economy of
Nigeria. Current Research Journal of Economic Theory, 4(2), 11-17.
Ola, C.S., (2001). Income Tax Law and Practice in Nigeria. Heinemann Educational
Books (Nigeria) Plc, Ibadan.
Okafor, R. G. (2012). Tax Revenue Generation and Nigerian Economic Development.
European Journal of Business and Management. 4 (19), 49-56.
Okonjo-Iweala, N. (2012), The National Tax Policy, 2012 Foreward to Policy Document
of Federal Ministry of Finance.
Omodero, C. O., Ekwe, M. C. & Ihendinihu, J. U. (2018). The impact of internally
generated revenue on economic development in Nigeria: Journal of Accounting and
Finance Research, 7(2), 166 – 173.
Oriakhi, D. & Ahuru, R. (2014). The Impact of Tax Reform on Federal Revenue
Generation in Nigeria. Journal of Policy and Development Studies, (9)1, 92-108.
Otu, H. B. & Adejumo, T. O. (2013). The effects of Tax Revenue on Economic growth in
Nigeria (1970 – 2011). International Journal of Humanities and Social Science
Invention, 2(61), 16-26.
Pallant, J. (2001). SPSS survival manual - a step by step guide to data analysis using
SPSS for windows (version 10), Buckingham Open University Press.
Pfister, M. (2009). Taxation for Investment and Development: An overview of Policy Challenges in Africa. An official documentation for the Ministerial Meeting and Expert Roundtable of the NEPAD-OECD Africa Investment Initiative. Retrieved from www.oecd.org on 24th July, 2015.
Roscoe, J. T. (1975). Fundamental Research Staistics for the Behavioural Science. (2nd
ed.), New York: Holt, Rinehart & Winston, Inc.
Samuel, S. E. & Tyokoso, G. (2014). Taxation and Revenue Generation: An Empirical
Investigation of Selected States in Nigeria. 4, 102-112.
Soyode, O. & Kajola, S. (2015). Taxation Principles and Practice in Nigeria. (Revised Ed.). Abeokuta: Lek Silicon Publishing Company Ltd.
Usman, M., Abba, A., Balarabe, B. Halilu, A. (2019). The Impact of Petroleum Profit Tax
on the Nigerian Economy, International Journal of Scientific Research in
Multidisciplinary Studies, 5 (12), 30-36.
Abiola, J. & Asiweh, M. (2012). Impact of Tax Administration on Government Revenue in a Developing Economy – A Case Study of Nigeria. International Journal of Business and Social Science, 3(8), 99-113.
Adegbite, T. A. & Fasina, H. T. (2019). Taxation and Revenue Generation in Nigeria.
Accounting and Taxation Review, 3(1), 82-92.
Adeyeye, G. B. (2019). Improving Tax Administration through Technology
Innovation in Nigeria (A Study of Federal Inland Recenue Service). Annals of
Spiru Haret University. Economic Series, 19(1), 31-63.
Adeyeye, G. B., Adeoye, O. A. & Adeyeye, A. M. (2018). Personal Income Tax
Administration in the Rural Communities (A Study of Selected Local
Government Areas in Ogun State, Nigeria). Annals of Spiru Haret University,
Economics Series, 18 (2), 23-52.
Adeyeye, G. B., Otusanya, O. J. & Arowomole, S. S. A. (2016). Honesty, tax fairness,
government’s responsiveness and voluntary tax compliance in Nigeria. Int. J.
Economics and Accounting, 7(4), 326-344.
Adeyeye, G. B. & Ajibolade, S. O. (2016). The Impact of Efficient and Effective Tax Laws and
Tax Policies on Voluntary Tax Compliance in Nigeria. Nigerian Journal of
Management Studies, 16 (1), 45-59.
Adeyeye, G. B. & Adeyemi, S. B. (2015). A Study of the Impact of Efficient and
Effective Tax Administration on Voluntary Tax Compliance in Nigeria.
Accounting Frontier, 6 (1), 39-52.
Agbaeze, E., Udeh S. & Onwuka I. (2015). Resolving Nigerian’s Dependence on Oil – The Derivation Model. Journal of African Studies and Development, 7(1), 1-14.
Ajape, K. M. & Adeyeye, G. B. (2017). Stakeholders’ Perceptions on Value Added
Tax Practice in Nigeria, Unilag Journal of Business, 3 (3), 186-209.
Akintoye, R. & Tashie, G. (2013). The Effect of Tax Compliance on Economic Growth and Development in Nigeria, West-Africa. British Journal of Arts and Social Sciences, 11(11), 222-231.
Aliyu, A. B. & Mustapha, A. A. (2020). Impact of tax revenue on economic growth in
Nigeria (1981-2017). Bullion, 44(4), Article 5, 64-77.
Alli, B. D. (2009). Managing the Tax Reform Process in Nigeria. The Nigerian Accountants, 42(1), 45-51.
Alreck, P. L. & Settle, R. B. (1995). Guidelines and Strategies for Conducting a Survey.
The Survey Research Handbook, (2nd Ed.), Chicago: Irwin.
Asaolu, T. O., Olabisi, J., Akinbode, S. O., and Alebiosu, O. N. (2018). Tax Revenue and
Economic Growth in Nigeria. Scholedge International Journal of Management &
Development, 5(7), 72-85.
Asika, N. (2004). Research Methodology in the Behavioural Sciences (5th Ed.), Ikeja,
Lagos, Longman Nigeria Plc.
Asuquo, R, (2012). Tax Issues in Nigeria: Issues and Challenges. Gauge – A Quarterly
Publication of the Federal Inland Revenue Service. April– June, 2012. ISSN 2066
9677.
Awa, F. N. & Ibeanu R. I. (2020). Impact of Tax Revenue on Economic Development in
Nigeria (1997- 2018). European Journal of Accounting, Auditing and Finance
Research, 8(7), 18-32.
Baridam, D. M. (2008). Research Methods in Administrative Sciences, Port Harcourt:
Sheerbroke Associates.
Bhartia, H. L. (2009). Public Finance. (14th Ed). New Delhi: Vika Publishing House PVT Limited.
Central Bank of Nigeria (2022). Monthly Average Exchange Rates of the Naira (Naira
Per Unit of Foreign Currency) – 2012 – 2021. Retrieved from https://www.
cbn.gov.ng/rates/exrates.asp?year =2021 on 20/8/2022.
Chiamaka, E. O., Obinna, P. N., Friday, N. E., & Oraekwuotu, C. N. (2021). Electronic
Tax System and Internally Generated Revenue in the Nigerian Emerging Economy:
The Study of Ebonyi State Board of Internal Revenue. International Journal of
Academic Research in Accounting Finance and Management Sciences, 11(2), 123-
149.
Edemode, J, (2009). Towards a People-Focused Tax System in Nigeria. Gauge – A Quarterly Publication of the Federal Inland Revenue Service. October – December, 2009. ISSN 2006-9677.
Eme, M. (2021). Nigeria: Revenue Generation Through Taxation Versus Investment
Attraction Through Tax Incentives: In Search of a Balance. Retrieved from
Https://Www.Mondaq.Com/Nigeria/Tax-Authorities/1091718/Revenue
Generation-Through-Taxation-Versus-Investment-Attraction-Through-Tax
Incentives-In-Search-Of-A-Balance-Miracle-Eme39s-Winning-Essay.
Ewa, U. E., Adesola, W. A. & Essien, E. N. (2020). Impact of Tax Revenue on Economic
Development in Nigeria. International Business Research, 13(6), 1-12.
Ewoma, D. (2012). The Tax Manual: Principles and practice of taxation in Nigeria. (1st
Ed.). Lagos: Nitty Gritty Press.
Federal Inland Revenue Service (2021). Annual Report and Account.
Federal Inland Revenue Service (2022). FIRS Revenue Collection Performance from
2011 to 2021. FIRS, Planning, Reporting & Statistics Department.
Federal Inland Revenue Service Handbook (2012). Excerpts of the Handbook - Federal Inland Revenue Service and Taxation Reforms in Democratic Nigeria Edited and published in 2012. Retrieved from www.firs.gov.ngon 25th July, 2018.
Federal Inland Revenue Service (Establishment) Act, 2007. Retrieved from http://www.osolakeblog.com/2015/05/federal-inland-revenue-service-establishment-act-2007.html on 24th July, 2018.
Industrial/Organisational Solutions (2010). Guidelines for Criterion-related Validation
Studies. Industrial/Organisational Solution Inc.White Paper 012.
Libabatu, S.G. (2014). Tax Revenue and Economic Growth in Nigeria. An unpublished Master of Science Degree in Accounting and Finance Project submitted to the School of Postgraduate Studies, Ahmadu Bello University, Zaria.
Micah, L., Ebere, C. & Umobong, A, (2012). Tax System in Nigeria – Challenges and the Way Forward. Research Journal of Finance and Accounting, 3(5), 9-15.
National Tax Policy, (2012). Policy Document of Federal Ministry of Finance in Nigeria.
National Tax Policy, (2017). Policy Document of Federal Ministry of Finance in Nigeria.
Nzotta, S.M. (2007). Tax Evasion Problems in Nigeria. A Critique. The Nigerian Accountants, 40(2), 40-43.
Odogu L. I., Obalakumo, P. A., Odoko, D. & Dadowei, O. M. (2021). The Effect of
Revenue from Taxation on Gross Domestic Product and Human Development
Index in Nigeria. Asian Journal of Economics, Business and Accounting 21(6),
1-11.
Odusola, A. (2006). Tax Policy Reforms in Nigeria. Research Paper No. 2006/03, United
Nations University, World Institute for Development Economic Research.
Organisation of Economic Cooperation and Development (OECD) (2012). Development Co-operation Report 2012: Lessons in Linking Sustainability and Development. Paris: OECD Publishing, DOI: Retrieved from http://dx.doi.org/10.1787/dcr-2012-en. on 27th May, 2015.
Ofurum, C. N., Amaefule, L. I., Okonya, B. E. & Henry, C. A. (2018). Impact of e-taxation
on Nigerian’s revenue and economic growth: A pre-post analysis: international
journal of finance and accounting 7(2), 19 – 26.
Ogbonna, G.N. & Appah, E. (2016). Effect of Tax Administration and Revenue on
Economic Growth in Nigeria. Research Journal of Finance and Accounting, 7(13),
49-58.
Ogbonna, G. N. & Appah, E. (2012a). Impact of Tax Reforms and Economic Growth of
Nigeria: A Time Series Analysis. Current Research Journal of Social Sciences, 4(1), 62-68.
Ogbonna, G. N. & Appah, E. (2012b). Impact of Petroleum Revenue and the Economy of
Nigeria. Current Research Journal of Economic Theory, 4(2), 11-17.
Ola, C.S., (2001). Income Tax Law and Practice in Nigeria. Heinemann Educational
Books (Nigeria) Plc, Ibadan.
Okafor, R. G. (2012). Tax Revenue Generation and Nigerian Economic Development.
European Journal of Business and Management. 4 (19), 49-56.
Okonjo-Iweala, N. (2012), The National Tax Policy, 2012 Foreward to Policy Document
of Federal Ministry of Finance.
Omodero, C. O., Ekwe, M. C. & Ihendinihu, J. U. (2018). The impact of internally
generated revenue on economic development in Nigeria: Journal of Accounting and
Finance Research, 7(2), 166 – 173.
Oriakhi, D. & Ahuru, R. (2014). The Impact of Tax Reform on Federal Revenue
Generation in Nigeria. Journal of Policy and Development Studies, (9)1, 92-108.
Otu, H. B. & Adejumo, T. O. (2013). The effects of Tax Revenue on Economic growth in
Nigeria (1970 – 2011). International Journal of Humanities and Social Science
Invention, 2(61), 16-26.
Pallant, J. (2001). SPSS survival manual - a step by step guide to data analysis using
SPSS for windows (version 10), Buckingham Open University Press.
Pfister, M. (2009). Taxation for Investment and Development: An overview of Policy Challenges in Africa. An official documentation for the Ministerial Meeting and Expert Roundtable of the NEPAD-OECD Africa Investment Initiative. Retrieved from www.oecd.org on 24th July, 2015.
Roscoe, J. T. (1975). Fundamental Research Staistics for the Behavioural Science. (2nd
ed.), New York: Holt, Rinehart & Winston, Inc.
Samuel, S. E. & Tyokoso, G. (2014). Taxation and Revenue Generation: An Empirical
Investigation of Selected States in Nigeria. 4, 102-112.
Soyode, O. & Kajola, S. (2015). Taxation Principles and Practice in Nigeria. (Revised Ed.). Abeokuta: Lek Silicon Publishing Company Ltd.
Usman, M., Abba, A., Balarabe, B. Halilu, A. (2019). The Impact of Petroleum Profit Tax
on the Nigerian Economy, International Journal of Scientific Research in
Multidisciplinary Studies, 5 (12), 30-36.
Published
2023-03-21
How to Cite
ADEYEYE, G. B., OYEKUNLE, A. O., ADEYEYE, A. M., & KORUBO, A. (2023). Optimising Tax Revenue for Economic Growth and Development in Nigeria. Global Journal of Accounting, 8(2), 16-42. Retrieved from http://gja.unilag.edu.ng/article/view/1707
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