THE ROLE OF TAX REVENUE AND FOREIGN DIRECT INVESTMENT IN PROMOTING ECONOMIC PROGRESS IN NIGERIA PROGRESS IN NIGERIA
THE ROLE OF TAX REVENUE AND FOREIGN DIRECT INVESTMENT IN PROMOTING ECONOMIC PROGRESS IN NIGERIA

Summary/Abstract: The study examined the impact of tax revenue on economic growth of Nigeriaproxied as gross domestic product (GDP) from 2000-2017. The study employedExploratory and ex-post facto designs and secondary data sourced from FederalInland Revenue Services (FIRS), UNCTAD, FDI/MNE database, World BankReport, United Nations Development Programme (UNDP) reports, CBNstatistical bulletin. Ordinary Least Squares (OLS) regression technique wasadopted to test the hypotheses of the study. The result reveals that tax revenuehas significant impact on GDP in Nigeria with R-squared showing that about87% variations in GDP can be attributed to tax revenue, while the remaining23% variations in GDP are caused by other factors not included in this model.This is further emphasized by the T-statistic p-value of 0.001 which shows thatthe regression result is statistically significant because it is less than 5%, level ofsignificance adopted for this study. The result from regression analysis alsorevealed that there is positive relationship between foreign direct investment andGross Domestic Product, with a p-value of +0.000, +0.001 < 0.05% significance Issue 3/201934level. The study concluded that tax revenue has a significant impact on GDP inNigeria. Also there is a positive relationship between FDI and economic growthin Nigeria; therefore the more FDI increases, the more economic growth. Thestudy recommended that functional tax structures that would ensure that tax iscollected from all taxable individuals, group of individuals and corporate bodiesand remitted accordingly to the government without diversion should beinstituted to widen the revenue base of the country. Government should liberalizethe Nigerian economy more by removing all barriers to trade such as arbitrarytariffs, import and export duties and other levies to encourage foreign investors.

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