Impact of Non-Oil Taxation on Economic Growth in Nigeria

Abstract

Nigeria, blessed with vast oil reserves, has for decades experienced a paradoxical reality: abundant natural resources coexist with persistent economic vulnerabilities. The dependence on this volatile commodity has exposed the economy to external shocks and hindered diversication. In this context, fostering alternative sources of revenue, particularly through non-oil taxation, emerging as a crucial imperative for sustainable economic growth. Driven by this critical need, this study assessed the impact of non-oil taxation on economic growth in Nigeria using quarterly data (2011QI–2022Q4). The study made use of ex-post facto research and time series data. Autoregressive Distributed Lagged (ARDL) and Error Correction Model (ECM) techniques were used to examine the short-run and long- run impacts and relation between company income tax (CIT), Value Added Tax (VAT), education tax (EDT), stamp duty tax (SDT), capital gain tax (CGT), and real gross domestic product (RGDP) in Nigeria. The study reveals that company income tax (CIT) has a positive, signicant impact while education tax (EDT) has a positive relationship but insignicant, and Value Added Tax (VAT), stamp duty Tax (SDT) have negative and insignicant impact on gross domestic product (RGDP) in Nigeria, which is proxy for economic growth in Nigeria in the short run. The long run result also showed that company income Tax (CIT) is positive, and insignicant and Value Added Tax (VAT), is positive, and signicant while, education Tax (EDT), stamp duty Tax (SDT), and capital gain Tax (CGT) have a negative and insignicant impact on economic growth in Nigeria. Therefore, the study recommended that the government should broaden the tax base, improve tax administration and compliance, review tax rates and incentives, and focus on long-term investments, transparency, and public engagement, which will build public trust and understanding and are crucial for successful tax policy implementation.