|
|
|
AUTHOR(S): Enyinnaya Sike, Sarah O. Anyanwu
|
|
TITLE |
 PDF |
|
ABSTRACT Direct taxes cover all aspects of society, especially in terms of resource allocation and economic growth. In reality, tax revenue is often used to measure the quality of a country's economy and vice versa. The relationship between economic growth and tax revenue has been paid little or no attention by academic circles. This article seeks to analyze the relationship between economic growth and tax revenue. Annual datum from 1970 to 2021 were employed to conduct an empirical analysis under the Autoregressive Distributed Lag Model (ARDL). The company income tax (CIT) explained by selected economic activities variable (Gross Domestic Product growth rate (GDP), Total Education expenditure by the government (EDU), Inflation Rate (INF), Exchange Rate (EXR), Production Capacity proxied by Manufacturing; value added (% of GDP)(POC), Oil Price proxied OPEC Basket Price ($))(OP), Oil Production (OPR) and Unemployment rate (UE)) as the regressors. Consequently, using the Autoregressive Distributed Lag Model and the co-integration test (ARDL), the results report that economic growth has a positive and significant effect on direct tax revenue in the long run. Through the ARDL model, there exists lengthy link exists between the variables, and the model demonstrates that economic growth indicators have significant impact on Company income tax (LNCIT) revenue in Nigeria, with the F-statistic of 3.614164, a p-value of 0.001096 (less than the threshold of 0.05) (5%) significant level to the tune of 72.80% as reported by the model R-square with about 88.07% and 55.49% adjusting speed back to equilibrium in the long-run. Therefore this study provides a view that economic growth is a determinant to promote tax revenue. Therefore, the Nigerian government should pay much attention to the improvement of its economic activities so as to maintain an increased taxable revenue base. |
|
KEYWORDS Direct Tax, Long-Run, Economic Growth, Company Income Tax |
|
|
|
Cite this paper Enyinnaya Sike, Sarah O. Anyanwu. (2022) Assessment of the Long-Run Equilibrium Relationship Between Economic Growth and Direct Tax Revenue in Nigeria: 1970 – 2021. International Journal of Economics and Management Systems, 7, 353-365 |
|
|
