THE IMPACT OF TAX REFORM ON FEDERAL REVENUE GENERATION IN NIGERIA
 /  THE IMPACT OF TAX REFORM ON FEDERAL REVENUE GENERATION IN NIGERIA

THE IMPACT OF TAX REFORM ON FEDERAL REVENUE GENERATION IN NIGERIA

Dickson .E. Oriakhi (PhD) and Rolle R. Ahuru

Abstract
The main objective of this paper is to ascertain the impact of tax reforms on tax revenue
generation in Nigeria. Specifically, an attempt will be made to verify the relationship between
federally collected revenue and specific tax revenue generation sources. The study employed
annual time series data spanning the years (1981-2011). The various income taxes were used as a
proxy for tax reforms. By way of preliminary test, the Augmented Dickey fuller was employed
to test for unit root. All the time series variables were non-stationary at levels but became
stationary after first differencing. The Johansen’s co-integration test shows that long-run
relationship exists between tax reform and federally collected revenue in Nigeria. The Granger
causality shows that custom and excise Duties and value-added Tax granger causes federally
collected revenue . The Partial Stock Adjustment Model shows that the various income taxes
were statistically significant and have positive relationship with federally collected revenue. The
coefficient of the Error correction model showed that 66.2940 percent of the deviation of
federally collected revenue from its long-run equilibrium value can be reconciled yearly. On the
whole, our study shows that tax reform by improving the tax system and reducing tax burden
enhances the ability of the government to generate more revenue. The study proposed that VAT
and CED provides good tax handle for the government to maximize its revenue. However, to
maximize revenue from these taxes, their administration should be improved upon with effort
directed towards reducing tax avoidance and evasion.

Journal Article
PDF
Creative Commons LicenseCreative Commons license
Economics
Taxation
Tax reform, federally collected revenue, unit root, cointegration, Granger causality, ECM and Nigeria.
Christian Bassey
18th April, 2018
18th April, 2018
http://oer.mciu.edu.ng/wp-content/uploads/2015/04/Rolle-Remi-Ahuru-9.pdf


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