The Impact of Tax Collection and Incentives on Economic Growth: Evidence from Nigeria

Abiodun Akanbi

doi:doi:10.11648/j.ijber.20200904.12

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The Impact of Tax Collection and Incentives on Economic Growth: Evidence from Nigeria

Abiodun Akanbi

Published in International Journal of Business and Economics Research (Volume 9, Issue 4)

Received: 23 November 2019 Accepted: 2 January 2020 Published: 4 June 2020

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Abstract

The debate on the effectiveness of taxation as an instrument for promoting economic growth remains inconclusive, as several studies have indicated mixed effect of taxation on economic growth. Against this background this study investigated the impact of tax collection and incentives on economic growth in Nigeria. Yearly data for the period 2010 – 2018 was collected from the Central Bank of Nigeria and Federal Inland Revenue Service. A multiple regression model was used, tax revenue was proxied by actual total tax collected, tax incentives was proxied by foreign direct investment equity and foreign direct investment other capital as independent variables. While economic growth was proxied by real gross domestic product (GDP) as the dependent variable. The data was tested for heteroscedasticity, multicollinearity and serial correlation to examine the robustness of the model. The findings revealed that there is a negative but insignificant relationship between tax revenue and economic growth. The findings also revealed that there is negative but insignificant relationship between and foreign direct investment equity and economic growth. While empirical results confirm that there is a negative and significant relationship between foreign direct investment other capital and economic growth. Given these findings, the study recommends the government to improve on the mechanisms for the collection of taxes to stimulate economic growth. Also, government should grant more incentives to sectors that drive growth, monitor such incentives gather relevant data of the actual amount of incentives relative to the economic growth in other evaluate the efficiency of tax incentives.

Published in	International Journal of Business and Economics Research (Volume 9, Issue 4)
DOI	10.11648/j.ijber.20200904.12
Page(s)	170-175
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

Tax Collections, Tax Incentive, Economic Growth, Multiple Regression

References

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[2]	Dergisi, U. S. (2017). he Application of the Laffer Curve in the economy of Turkey. The Journal of International Social Research, 10 (50), 654-659.
[3]	Feyitimi, O., Temitope, O. A., Akeem, L. B., & Oladele, O. S. (2016). Tax Incentives And the Growth of Small And Meduim Scale Enterprises In Developing Economy: The Nigerian Experience. European Journal of Research and Reflection in Management Science, 4 (2), 24-42.
[4]	Gabriel, E. D., & Ezekiel, A. I. (2019). The Nexus between Tax Revenue and Economic Growth in Nigeria. International Journal of Applied Economics, Finance and Accounting, 4 (2), 45-55.
[5]	Islahi, A. A. (2006). Ibn Khaldun’s Theory of Taxation and Its Relevance Today. The Islamic Research and Training Institute (pp. 1-24). Madrid: Islamic Cultural Centre of Madrid. doi: 10.15238/tujise.2015.2.2.1-19
[6]	Khumbuzile, D., & Khobai, H. (2018). The impact of Taxation on Economic Growth in South Africa. Munich: Munich Personal RePEc Archive.
[7]	Lapatinas, A., Kyriakou, A., & AntoniosGaras. (2019). Taxation and economic sophistication: Evidence from OECD countries. PLoS One, 14 (3), 1-21.
[8]	Macek, R. (2014). The Impact of Taxation on Economic Growth: Case Study of OECD Countries. Review of Economic Perpectives, 14 (4), 309-328.
[9]	Mdanat, M. F., Shotar, M., Samawi, G., Mulot, J., Arabiyat, T. S., & Alzyadat, M. A. (2018). Tax structure and economic growth in Jordan, 1980-2015. EuroMed Journal of Business, 1, 102-127.
[10]	Ojong, C. M., Anthony, O., & Arikpo, O. F. (2016). The Impact of Tax Revenue on Economic Growth: Evidence from Nigeria. Journal of Economics and Finance, 7 (1), 32-38.
[11]	ONAKOYA, A. B., & AFINTINNI, O. I. (2016). Taxation And Economic Growth In Nigeria. Asian Journal of Economic Modelling, 4 (4), 199-210.
[12]	Peters, G. T., & Bariyima D. Kiabel. (2015). Tax Incentives and Foreign Direct Investment in Nigeria. Journal of Economics and Finance, 6 (5), 10-20.
[13]	Prillaman, S. A., & Meier, K. J. (2014). Taxes, Incentives, and Economic Growth: Assessing the Impact of Pro-business Taxes on U.S. State Economies. The Journal of Politics, 76 (2), 364-379.
[14]	SAIBU, O. M. (2015). Optimal tax rate and economic growth. Evidence from Nigeria and South Africa. E u r o E c o n o m i c a, 1 (34), 41-50.
[15]	Siyanbola, T. T., Adedeji, S., Adegbie, F. F., & Rahman, M. M. (2017). Tax incentives and industrial/economic growth of subSaharan African States. Journal of Advanced Research in Business and Management Studies, 7 (2), 78-90. Retrieved October 25, 2019
[16]	Ugwunta, O. D., & Ugwuanyi, U. B. (2015). Effect of distortionary and non-distortionary taxes on economic growth: Evidence from Sub-Saharan African countries. Journal of Accounting and Taxation, 7 (6), 106-112.

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Abiodun Akanbi. (2020). The Impact of Tax Collection and Incentives on Economic Growth: Evidence from Nigeria. International Journal of Business and Economics Research, 9(4), 170-175. https://doi.org/10.11648/j.ijber.20200904.12

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ACS Style

Abiodun Akanbi. The Impact of Tax Collection and Incentives on Economic Growth: Evidence from Nigeria. Int. J. Bus. Econ. Res. 2020, 9(4), 170-175. doi: 10.11648/j.ijber.20200904.12

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AMA Style

Abiodun Akanbi. The Impact of Tax Collection and Incentives on Economic Growth: Evidence from Nigeria. Int J Bus Econ Res. 2020;9(4):170-175. doi: 10.11648/j.ijber.20200904.12

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@article{10.11648/j.ijber.20200904.12,
  author = {Abiodun Akanbi},
  title = {The Impact of Tax Collection and Incentives on Economic Growth: Evidence from Nigeria},
  journal = {International Journal of Business and Economics Research},
  volume = {9},
  number = {4},
  pages = {170-175},
  doi = {10.11648/j.ijber.20200904.12},
  url = {https://doi.org/10.11648/j.ijber.20200904.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20200904.12},
  abstract = {The debate on the effectiveness of taxation as an instrument for promoting economic growth remains inconclusive, as several studies have indicated mixed effect of taxation on economic growth. Against this background this study investigated the impact of tax collection and incentives on economic growth in Nigeria. Yearly data for the period 2010 – 2018 was collected from the Central Bank of Nigeria and Federal Inland Revenue Service. A multiple regression model was used, tax revenue was proxied by actual total tax collected, tax incentives was proxied by foreign direct investment equity and foreign direct investment other capital as independent variables. While economic growth was proxied by real gross domestic product (GDP) as the dependent variable. The data was tested for heteroscedasticity, multicollinearity and serial correlation to examine the robustness of the model. The findings revealed that there is a negative but insignificant relationship between tax revenue and economic growth. The findings also revealed that there is negative but insignificant relationship between and foreign direct investment equity and economic growth. While empirical results confirm that there is a negative and significant relationship between foreign direct investment other capital and economic growth. Given these findings, the study recommends the government to improve on the mechanisms for the collection of taxes to stimulate economic growth. Also, government should grant more incentives to sectors that drive growth, monitor such incentives gather relevant data of the actual amount of incentives relative to the economic growth in other evaluate the efficiency of tax incentives.},
 year = {2020}
}

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TY  - JOUR
T1  - The Impact of Tax Collection and Incentives on Economic Growth: Evidence from Nigeria
AU  - Abiodun Akanbi
Y1  - 2020/06/04
PY  - 2020
N1  - https://doi.org/10.11648/j.ijber.20200904.12
DO  - 10.11648/j.ijber.20200904.12
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 170
EP  - 175
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20200904.12
AB  - The debate on the effectiveness of taxation as an instrument for promoting economic growth remains inconclusive, as several studies have indicated mixed effect of taxation on economic growth. Against this background this study investigated the impact of tax collection and incentives on economic growth in Nigeria. Yearly data for the period 2010 – 2018 was collected from the Central Bank of Nigeria and Federal Inland Revenue Service. A multiple regression model was used, tax revenue was proxied by actual total tax collected, tax incentives was proxied by foreign direct investment equity and foreign direct investment other capital as independent variables. While economic growth was proxied by real gross domestic product (GDP) as the dependent variable. The data was tested for heteroscedasticity, multicollinearity and serial correlation to examine the robustness of the model. The findings revealed that there is a negative but insignificant relationship between tax revenue and economic growth. The findings also revealed that there is negative but insignificant relationship between and foreign direct investment equity and economic growth. While empirical results confirm that there is a negative and significant relationship between foreign direct investment other capital and economic growth. Given these findings, the study recommends the government to improve on the mechanisms for the collection of taxes to stimulate economic growth. Also, government should grant more incentives to sectors that drive growth, monitor such incentives gather relevant data of the actual amount of incentives relative to the economic growth in other evaluate the efficiency of tax incentives.
VL  - 9
IS  - 4
ER  -

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Author Information

Abiodun Akanbi

Department of Business Administration, Faculty of Management Sciences, Nile University of Nigeria, Abuja, Nigeria

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APA Style

Abiodun Akanbi. (2020). The Impact of Tax Collection and Incentives on Economic Growth: Evidence from Nigeria. International Journal of Business and Economics Research, 9(4), 170-175. https://doi.org/10.11648/j.ijber.20200904.12

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ACS Style

Abiodun Akanbi. The Impact of Tax Collection and Incentives on Economic Growth: Evidence from Nigeria. Int. J. Bus. Econ. Res. 2020, 9(4), 170-175. doi: 10.11648/j.ijber.20200904.12

Copy | Download

AMA Style

Abiodun Akanbi. The Impact of Tax Collection and Incentives on Economic Growth: Evidence from Nigeria. Int J Bus Econ Res. 2020;9(4):170-175. doi: 10.11648/j.ijber.20200904.12

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@article{10.11648/j.ijber.20200904.12,
  author = {Abiodun Akanbi},
  title = {The Impact of Tax Collection and Incentives on Economic Growth: Evidence from Nigeria},
  journal = {International Journal of Business and Economics Research},
  volume = {9},
  number = {4},
  pages = {170-175},
  doi = {10.11648/j.ijber.20200904.12},
  url = {https://doi.org/10.11648/j.ijber.20200904.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20200904.12},
  abstract = {The debate on the effectiveness of taxation as an instrument for promoting economic growth remains inconclusive, as several studies have indicated mixed effect of taxation on economic growth. Against this background this study investigated the impact of tax collection and incentives on economic growth in Nigeria. Yearly data for the period 2010 – 2018 was collected from the Central Bank of Nigeria and Federal Inland Revenue Service. A multiple regression model was used, tax revenue was proxied by actual total tax collected, tax incentives was proxied by foreign direct investment equity and foreign direct investment other capital as independent variables. While economic growth was proxied by real gross domestic product (GDP) as the dependent variable. The data was tested for heteroscedasticity, multicollinearity and serial correlation to examine the robustness of the model. The findings revealed that there is a negative but insignificant relationship between tax revenue and economic growth. The findings also revealed that there is negative but insignificant relationship between and foreign direct investment equity and economic growth. While empirical results confirm that there is a negative and significant relationship between foreign direct investment other capital and economic growth. Given these findings, the study recommends the government to improve on the mechanisms for the collection of taxes to stimulate economic growth. Also, government should grant more incentives to sectors that drive growth, monitor such incentives gather relevant data of the actual amount of incentives relative to the economic growth in other evaluate the efficiency of tax incentives.},
 year = {2020}
}

Copy | Download

TY  - JOUR
T1  - The Impact of Tax Collection and Incentives on Economic Growth: Evidence from Nigeria
AU  - Abiodun Akanbi
Y1  - 2020/06/04
PY  - 2020
N1  - https://doi.org/10.11648/j.ijber.20200904.12
DO  - 10.11648/j.ijber.20200904.12
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 170
EP  - 175
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20200904.12
AB  - The debate on the effectiveness of taxation as an instrument for promoting economic growth remains inconclusive, as several studies have indicated mixed effect of taxation on economic growth. Against this background this study investigated the impact of tax collection and incentives on economic growth in Nigeria. Yearly data for the period 2010 – 2018 was collected from the Central Bank of Nigeria and Federal Inland Revenue Service. A multiple regression model was used, tax revenue was proxied by actual total tax collected, tax incentives was proxied by foreign direct investment equity and foreign direct investment other capital as independent variables. While economic growth was proxied by real gross domestic product (GDP) as the dependent variable. The data was tested for heteroscedasticity, multicollinearity and serial correlation to examine the robustness of the model. The findings revealed that there is a negative but insignificant relationship between tax revenue and economic growth. The findings also revealed that there is negative but insignificant relationship between and foreign direct investment equity and economic growth. While empirical results confirm that there is a negative and significant relationship between foreign direct investment other capital and economic growth. Given these findings, the study recommends the government to improve on the mechanisms for the collection of taxes to stimulate economic growth. Also, government should grant more incentives to sectors that drive growth, monitor such incentives gather relevant data of the actual amount of incentives relative to the economic growth in other evaluate the efficiency of tax incentives.
VL  - 9
IS  - 4
ER  -

Copy | Download