Effect of Non-Oil Taxes on Economic Growth in Nigeria

Ese B. Nsentip, Nkanikpo I. Ibok & Eno G. Ukpong

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Abstract

This study examined the effect of non-oil taxes on economic growth in Nigeria using annual time series data. Non-oil taxes were proxied using company income tax, value added tax and stamp duties. Descriptive statistics revealed that gross domestic product had a mean value of ₦22,535,370 billion, while company income tax, stamp duties, and value added tax averaged ₦457.29 billion, ₦3.58 billion, and ₦104,515.7 billion, respectively. The Augmented Dickey- Fuller (ADF) unit root test indicated that all variables were integrated at first difference (1). Johansen co-integration results confirmed the existence of four long-run equilibrium relationships among the variables. The Auto-Regressive Distribution Lag model estimates showed that stamp duties (₦281,367.0, p = 0.0279) and company income tax (₦41,940.87, p = 0.0000) significantly contribute to gross domestic product growth, while value added tax (₦10.43, p = 0.0690) had a relatively weaker impact. The error correction model coefficient of -0.2327 (p = 0.0000) suggested a moderate speed of adjustment toward equilibrium. Based on these findings, it was recommended that enhancing tax administration efficiency, strengthening compliance measures and ensuring the productive allocation of tax revenues could foster economic growth in Nigeria.

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