Research Article

Impact of Taxation on Wealth Creation in Nigeria: 2010-2023

Fadheela Uba Jahun1*, Kabiru Isah Dandago2
1 Accounting & Finance Department, Transmission Company of Nigeria, Kumbotso, Kano State, Nigeria
2 Department of Accounting, Bayero University, Kano, Nigeria
* Corresponding author: fjahoon.86@gmail.com
Published: Dec, 2024
DOI: 10.67894/bjms.2024.o8srga2t
Pages: 205-221

Abstract

The study examines the impact of taxation on wealth creation in Nigeria for a period of fourteen years (2010-2023). Data was collected from published reports of the Central Bank of Nigeria (CBN) and the Federal Inland Revenue Service (FIRS) and analyzed by means of descriptive statistics, correlation and multiple regressions. The study found that taxation (direct and indirect) is generally an instrument for sustainable revenue generation and collection, stabilization of the economy, controlling productive and consumption behaviors and narrowing of the gap between the rich and the poor. Individually, some taxes have more impact on wealth creation than others. For example, the impact of Petroleum Profit Tax (PPT) is higher than that of Companies Income Tax (CIT) or Value Added Tax (VAT) in Nigeria. The study recommends that government should intensify efforts at blocking all loopholes in the tax laws as well as bring more prospective tax payers (firms and individuals) into the tax net, especially those nigh net worth individuals and firms who do not pay tax properly. More so, Nigerian government should judiciously use the tax revenue collected for executing various developmental projects, including empowerment of micro, small and medium enterprises who could improve the quality of livelihood and infrastructures in the country, with a view to creating massive wealth needed to pave ways for the country to achieve sustainable development. 

Keywords

Taxation Tax Revenue Wealth Creation Infrastructure Sustainable Development

References

  1. Abomaye-Nimenibo, W. A. S., Micheal, J. E. M., & Friday, H. C. (2018). An empirical analysis of tax revenue and economic growth in Nigeria from 1980 to 2015. Global Journal of Human Social Science:Financial Political Science, 18(3), 9–40.
  2. Adefolake, A. O., & Omodero, C. O. (2022). Tax revenue and economic growth in Nigeria. Cogent Business & Management, 9(1), 1-19.
  3. Adereti, S. A., Adesina, J. A. & Sanni, M. R. (2011). Value added tax and economic growth of Nigeria. European Journal of Humanities and Social Sciences, 10(1), 456-471.
  4. Afuberoh, D., & Okoye E. (2014). The impact of taxation on revenue generation in Nigeria: A Study of Federal Capital Territory and Selected States. International Journal of Public Administration and Management Research (IJPAMR), 2(2), 22-47.
  5. Anyanfo, A. M. O. (1996). Public finance in a developing economy: The Nigerian case. The department of banking and finance. University of Nigeria.
  6. Appah, E. (2010). The problems of tax planning and administration in Nigeria: The Federal and State Governments Experience. International Journal of lab Organ Psychol, 4(1-2), 1-14.
  7. Asaolu, T. O., Olabisi, J., Akinbode, S. O., & Alebiosu, O. N. (2018). Tax revenue and economic growth in Nigeria. Scholedge International Journal of Management & Development, 5(7), 72–85.
  8. Ayeni, A. P., Ibrahim, J., & Adeyemi, A. O. (2017). Tax revenue and Nigerian economic growth. EuropeanJournal of Accounting, Auditing and Finance Research, 5(11), 75–85.
  9. Ayuba, A. (2014). Impact of non-oil revenue on economic growth: the Nigerian perspective. International Journal of Finance and Accounting, 3(5), 303-309.
  10. Ayuba, A. J. (2014). Impact of non-oil revenue on economic growth: The Nigerian perspective. International Journal of Management Sciences and Business Research, 1(9), 12–22.
  11. Bakija, J. (2013). Social Welfare, Income Inequality, and Tax Progressivity: A Primer on Modern Economic Theory and Evidence. Journal of Economic Perspectives, 1(1), 21- 35.
  12. BaliamouneLutz, M., & Garello, P. (2011). Effects of taxation and tax progressivity on entrepreneurship in a large group of European countries.
  13. Bello, M. A. (2020). The effect of economic reforms on economic growth: Evidence from Nigeria. Global Journal of Accounting and Economy Research, 1 (2): 97-112.
  14. Bruno, O. O., & Emmanuel, A. O. (2019). Tax revenue and the Nigerian Economy. International Journal ofAcademic Science Research, 3(2), 61–66.
  15. Chenge, A. A., &Oigbochie, A. E. (2023). Sustaining taxation in rentier economies: Evidence from Nigeria. Journal of global economics Economics, Political Science, 1(2), 56-72.
  16. Chigbu, E. E., & Njoku, C. O. (2015). Taxation and the Nigerian Economy: (1994-2012). Management Studies and Economic Systems (MSES), 2(2), 111-128.
  17. Dladla, K., & Khobai, H. (2018). The impact of taxation on economic growth in South Africa. Nelson Mandela University.
  18. Emory, C. W. (1982). Regression analysis and correlation. In: Business research methods. 5th ed. Richard D. Irwin, Inc, Homewood, IL.
  19. Etim, O. E., Nsima, J. U., Austin, U. N., Samuel, S. C., & Anselem, M. U. (2021). Comparative analysis of the effect of direct and indirect taxation revenue on economic growth of Nigeria. Account and FinancialManagement Journal, 6(7), 2403–2418.
  20. Farrar, D. E., & Glauber, R. R. (1967). Multicollinearity in Regression Analysis: The Problem Revisited. The Review of Economics and Statistics, 49, 92-107.
  21. Hamza, A. A. (2013). Entrepreneurship development. A publication of the National Open University of Nigeria, 16-33.
  22. Inyiama, O. I., & Ubesie, M. C. (2016). Effect of value added tax, customs and excise duties on Nigeria economic growth. International Journal of ManagerialStudies and Research, 4, 53–62.
  23. John, O. A., & Dickson, O. E. (2020). Tax revenue and economic growth in Nigeria. Journal of Taxation andEconomic Development, 19(1), 15–34.
  24. Lee, Y., & Gordon, R. H. (2005). Tax structure and economic growth. Journal of Public Economics, 89, 1027-1043.
  25. Lymer, A. (2010). Taxation Policy and Practice, 16th ed., Birmingham: Fiscal Publication.
  26. Mukolu, M. O., & Ogodor, B. N. (2021). The effect of value added tax on economic growth of Nigeria. IAR Journal of Business Management, 2(1), 203–210.
  27. Musgrave, R. A. (1959). The Theory of Public Finance: A Study in Public Economy. McGraw-Hill.
  28. Ogbonna, G. N., & Ebimobowei, A. (2012). Impact of tax reforms and economic growth of Nigeria: A Time Series Analysis. Current Research Journal of Social Sciences, 4(1), 62-68.
  29. Ojong, C. M., Anthony, O., & Arikpo, O. F. (2016). The impact of tax revenue on economic growth: Evidence from Nigeria. IOSR Journal of Economics and Finance (IOSR-JEF), 7(1), 32-38.
  30. Onuoha, L. N., & Akintoye, R. I. (2018). Taxation as a veritable tool for wealth creation in Nigeria. International Journal of Advanced Academic Research Social & Management Sciences, 4(12), 101-113.
  31. Otu, O. H., & Adejumo, T. O. (2013). The effect of tax revenue on economic growth in Nigeria. International Journal of Humanities and Social Science Invention, 2 (6), 16–26.
  32. Saidu, A. (2014). Impact of tax incentives on economic growth and industrial development inNigeria. InternationalJournal of Economic, 2(1), 45-76.
  33. Seth H. (2019).Taxation and entrepreneurship. Giertz University of Texas at Dallas.
  34. Somorin, O. A. (2011). National Tax policy, issues, challenges and prospects. Paper Presented at the MPTP workshop, Abuja, 19th October.
  35. Somorin, O. A. (2012). Teju Tax Reference Book. Lagos: Malthouse Press Limited.
  36. Udofot, P. O., & Etim, E. O. (2017). The effect of tax revenue components from SME's and economic growth of Nigeria.
  37. Victory, C. O., Daniel, O., Promise, E. (2022). Impact of Tax Reforms on Economic Growth of Nigeria (2000-2021). Goodwood Akuntansi dan Auditing Reviu, 1(1), 79-95.
  38. Yadawananda, N., & Achal, K. G. (2020). Tax structure and economic growth: A study of selected Indian states. Journal of Economic Structures, 9(38), 1–12.
  39. Yahaya, K. A., & Bakare, T. O. (2018). Effect of petroleum profit tax and company income tax on economic growth in Nigeria. Journal of PublicAdministration, Finance and Law, 13(1), 100–121.
How to Cite

Jahun, F. U., & Dandago, K. I. (2024). Impact of Taxation on Wealth Creation in Nigeria: 2010-2023. Bayero Journal of Management Sciences, 6(2), 205-221. https://doi.org/10.67894/bjms.2024.o8srga2t

F. U. Jahun, and K. I. Dandago, "Impact of Taxation on Wealth Creation in Nigeria: 2010-2023," Bayero Journal of Management Sciences, vol. 6, no. 2, pp. 205-221, December 2024. doi: 10.67894/bjms.2024.o8srga2t

Share this article:
Facebook X / Twitter LinkedIn
Download PDF View Full Text (PDF) Back to Articles