European Journal of Accounting, Auditing and Finance Research (EJAAFR)

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Tax Revenue Volatility and Economic Growth in Nigeria


Over the years Nigeria has experienced downward slope in its productivity and economic growth. This is evident in the country’s inability to deliver on national plan, high rate of unemployment, poor road networks, low quality education and low standards of living. In all these, studies have shown low and unsteady revenue generation in the country. This study investigated tax revenue volatility on economic growth in Nigeria, using inflation and exchange rates as moderating variables. This study adopted ex post facto research design. Data were obtained from certified sources; namely, National Bureau of Statistics, Central Bank of Nigeria Statistical Bulletin and Federal Inland Revenue Services for the 1981Q1-2017Q4, amounting to one hundred and eight (108) observations. Data were exposed to the scrutiny of the appropriate regulatory agencies for validity and reliability. Pre-estimation tests were conducted using Pearson correlation and stationarity tests. The post-estimation tests included linearity, Heteroskedasticity, Breusch-Godfrey serial Correlation Lagrangian Multiplier and stability test. Data were analyzed using both descriptive and inferential statistics. Findings revealed that tax revenue volatility moderated by inflation rate and exchange rate had significant effect on economic growth (EG) in Nigeria (Adj. R2 =0.6, F (3, 105) =2140.285, p <0.05; β1 = 0.219). This study concluded that tax revenue volatility affects economic growth in Nigeria. It was recommended that government should formulate tax policies that will encourage steady tax revenue. In addition, government should ensure prudent application of tax fund to the development of infrastructure that would translate into economic growth.

Keywords: Tax Revenue, economic growth, gross domestic products, tax bribe, tax compliance costs, tax penalty, tax volatility

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