International Journal of Accounting and Taxation

Granger Causality Effect of Taxation on Economic Growth in Nigeria
Adeniran, Busari G, Uguru, Leonard C.

Abstract
This study examines the extent to which revenue from taxation has improved the growth of Nigerian economy. An Ordinary Least Square (OLS) model was specified where Company Income Tax (CIT), Petroleum Profit Tax (PPT) and Value Added Tax (VAT) are employed as pre-determined variables for economic growth measured by Real Gross Domestic Product (RGDP). Prior to model fitting, Jarque-Bera test for normality revealed that all variables employed showed normality and therefore suitable for the specified function. However, a logarithmic transformation was required to reduce levels of variability among the observed variables. Different model‟s validity checks such as Coefficient of determination (R2), Multiple Correlation Coefficient(r), Durbin-Watson, Akaike info Criterion (AIC), Bayesian Information Criterion (BIC) and F-statistic were used to validate the model. Hypotheses were formulated and tested using statistical tools to validate theoretical backgrounds on economic growth as it is influenced by taxation. The results indicated that taxation had impacted positively on the growth of Nigerian economy and the study therefore recommended that VAT and CIT collections should be further encouraged and developed while more political efforts should be made towards ensuring stable business environments in the oil producing areas of the nation to improved collection of PPT.

Full Text: PDF     DOI: 10.15640/ijat.v8n1a3