ABSTRACT
The study examined the effects of taxation on the growth of the Nigerian economy over a period of 30 years
ranging from 1990–2019. The data on taxation was sourced from the Federal Inland Revenue Service
(FIRS) and the Nigerian Bureau of Statistics (NBS), while that of the Nigerian economy was sourced from
the Central Bank of Nigeria (CBN) Statistical Bulletin 2020. The explanatory variables were Petroleum
Profit Tax (PPT), Company Income Tax (CIT), Custom and Excise Duties (CED), and Value Added Tax
(VAT), which are proxies for taxation, and the dependent variables were Gross Domestic Product of
Mining & Quarrying (MQGDP) and Manufacturing & Processing (MPGDP), as proxies for the Nigerian
Economy. Diagnostic tests that were carried out include: descriptive statistics used to test for the
normality of the data; the Augmented Dickey Fuller unit root test to test for the stationarity of the data;
and the Johansen Co-integration test to test for long-run equilibrium relationships that exist among the
variables. For data analysis, Auto Regressive Distributive Lag (ARDL) techniques were used as a
statistical tool, and the statistical package used was E-view version 10. Based on the results obtained from
ARDL, it was found that Petroleum Profit Tax (PPT), Custom & Excise Duties (CED) and Value Added
Tax (VAT) have positive effects on the growth of mining and quarrying, with Company Income Tax (CIT)
exerting a negative effect on them. The findings also revealed that Petroleum Profit Tax (PPT) and
Customs & Excise Duties (CED) have a positive impact on growth of the manufacturing and processing
sector, while Company Income Tax (CIT) and Value Added Tax have a negative impact. Based on the
findings stated above, it was concluded that taxation has a positive effect on the growth of the Nigerian
economy. This study recommends that the government and relevant tax authorities should strive to ensure
that tax revenue is increased and channeled to those sectors of the economy that will in turn engender
growth.
Keywords: Nigerian economy; tax revenue; mining and quarrying; manufacturing and processing.
