Tax Buoyancy and Elasticity in Nigeria: The Case of Aggregate Tax (Published)
This study was motivated by the growing demand for government funds to meet up with their expenditures as well as diversification for different streams of income. Empirical evidence has shown that the buoyancy and elasticity of tax are two clear ways of measuring how tax revenue responds to changes in income. This study adopted secondary data sets, which were sourced from CBN statistical Bulletin, National Bureau of statistics (NBS) and Federal Inland Revenue Service (FIRS) of Nigeria. A standard multiple regression estimation procedure in the form of the vector error correction model (VECM) model was adopted. The result from the study showed that tax revenue is significantly buoyant and elastic in Nigeria. In view of the result the study recommended among others that, the government introduces policies that will help her take advantage of the potentials inherent in the country and increase its tax revenue thereby having another source of financing its budget other than the current crude oil proceeds.
Keywords: GDP, Nigeria, Tax Buoyancy, Tax Elasticity, Tax Revenue
TAX BUOYANCY AND ELASTICITY IN NIGERIA: THE CASE OF AGGREGATE TAX (Review Completed - Accepted)
This study was motivated by the growing demand for government funds to meet up with their expenditures. Empirical evidence has shown that the buoyancy and elasticity of tax are two clear ways of measuring how tax revenue responds to changes in income. This study adopted secondary data sets, which were sourced from CBN statistical Bulletin, National Bureau of statistics (NBS) and Federal Inland Revenue Service (FIRS) of Nigeria. A standard multiple regression estimation procedure in the form of the vector error correction model (VECM) model was adopted. The result from the study showed that tax revenue is significantly buoyant and elastic. In view of the result the study recommended among others that, the government introduces policies that will help her take advantage of the potentials inherent in the country and increase its tax revenue thereby having another source of financing its budget away from the current crude oil.
Keywords: GDP, Nigeria, Tax Buoyancy, Tax Elasticity, Tax Revenue
Tax Incentives and Revenue Productivity of the Nigerian Tax System (Published)
The desirability of using tax incentives to facilitate new investment is a necessary condition for developing an avenue for managing the unsustainable fiscal deficits in Nigeria. Thus, effective tax systems are not only central to promoting economic growth but also crucial for achieving macroeconomic goals. The study examines tax incentives and revenue productivity of the Nigerian tax system from 1981 to 2009 periods in order to identify the short-run performance of various taxes. On the whole, the study reports unsatisfactory level of total tax revenue productivity in the country. This may be as a result of institutional failing, corruption in the tax system and the negligence created by the management of both oil and non-oil revenue. The study also identified the seemingly lagging sources of Nigeria’s Federal revenues and the non-buoyancy of the total tax revenue is a complete revelation of the poor tax effort in the Nigerian tax system. Reducing fiscal deficit in the budgetary process will put a check on expensive public expenditures. The study concludes that the report on total tax revenue buoyancy calls for serious attention and policy challenge, considering the enormous importance of generating resources and less dependence on external borrowing to facilitating economic growth and development. This can however be tackled by adopting sound policies that will reduce or eliminate the corruption prevalent in the tax system coupled with the inefficiency rocking the system.
Keywords: Revenue Productivity, Tax Buoyancy, Tax Elasticity and Nigerian Economy, Tax Incentives