EFFECT OF TAX REVENUE ON INCLUSIVE GROWTH IN NIGERIA

BY

FATUNBI ELIZABETH TEMITAYO

BFN/2018/1058

A PROJECT SUBMITTED TO THE DEPARTMENT OF FINANCE, FACULTY OF

MANAGEMENT SCIENCES, FEDERAL UNIVERSITY OYE-EKITI, EKITI STATE

NIGERIA, IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD

OF BACHELOR OF SCIENCE (B.Sc. Hons) DEGREE IN FINANCE

AUGUST, 2023
 DECLARATION

I, Fatunbi, Elizabeth Temitayo hereby declare that this study was carried out by me under the

supervision of Dr. Oyedeko Yusuf and the study has not been submitted in any form for the

award of any degree or diploma.

 CERTIFICATION

This project with the title “Effect of Tax Revenue on Inclusive Growth in Nigeria” was submitted

by Fatunbi Elizabeth Temitayo and carried out under my supervision in the Department of

Finance, Faculty of Management Sciences, Federal University Oye-Ekiti.

Supervisor Date

Head of Department

Date
 External Examiner

Date

DEDICATION

I hereby dedicate this project to God Almighty, the one who gives knowledge and understanding

to humanity. Let his name be glorified.

Also, for the support I get physically, spiritually and financially from my parents and my

brothers, Mr. and Mrs. Fatunbi as well as Mr. Abayomi Fatunbi and Mr. Temidayo Fatunbi, I

dedicate the success of this paper them.

 ACKNOWLEDGEMENTS

To God who created the world, I really appreciate your continuous did over my life, I say may

his name be glorified.

To my supervisor who double as my consultant in the field of study in person of Dr. Yusuf

Oyedeko, I really do respect you for your tolerance and time in the course of this project to

ensure I do everything right, I say a big thank you for the warmth and tutoring may God continue

to honor you.

To my lovely HOD Prof. Dapo Fapetu, I really value your effort towards this project. May God

bless you sir.

A great thanks to those I have drank from their table of knowledge just for me to become a

success that I am today, in persons of Prof. Babatunde Afolabi, Dr, Adepoju Asaolu, Dr. Alex

Balogun, Dr. Dada, Dr. Mrs. Abere, Mr. Odunayo Ogunsanwo, Mr. Gbenga Olorunmade, Mr

Anthony Oyemenda.

My lovely siblings Temidayo, Abayomi, and Mitchel Fatunbi, you guys remain the best gift I can

ask for when it comes to family. To the entire family of Fatunbi, I really do appreciate you all.

To my departmental mates, college mates, hostel mate, Living Faith Church Oye Ekiti, my

friends (Akande Itunu, Falade Temiloluwa, Fasoranti olamide Aworinde Deborah and Martins

Christiana) who made my journey in FUOYE valueable. I say a big thank

 TABLE OF CONTENTS

Title page

Certification

Dedication

Acknowledgements

Table of Contents

List of Tables (if any)

List of Figures (if any)

Abstract

CHAPTER ONE: INTRODUCTION

1.1 Background to the Study.

1.2 Statement of Problem.

1.3 Research Questions

1.4 Objectives of the Study

1.5 Research Hypotheses

1.6 Significance of the Study

1.7 Scope of the Study

1.8 Definition of Terms

CHAPTER TWO: LITERATURE REVIEW

2.1. Conceptual Review

2.2. Theoretical Review

2.3. Empirical Review

2.4. Gap in Literature

CHAPTER THREE: METHODOLOGY

3.1. Research Design

3.2 Population of the Study

3.3 Sampling Technique and Sample Size

3.4 Source and Methods of Data Collection

3.5 Methods of Data Analysis

3.6 Model Specification

3.7 Definition and Measurements of Variables

3.8 A Priori Expectation

CHAPTER FOUR: DATA ANALYSIS AND PRESENTATION of

4.1 Descriptive analysis (link this with pre-estimation test)

4.2 Interpretation of Results

4.3 Test of Hypotheses (optional)

4.4 Discussion of Findings

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Summary

5.2 Conclusion
5.3 Recommendations

5.4 Contributions to Knowledge

5.5 Limitations of the Study

5.6 Suggestions for Further Studies

References

Questionnaire/Appendix.

Appendix should also include raw data, output from SPSS, E VIEW computer analysis prints

out.
 LIST OF TABLES

Page

4.1 Descriptive Statistics

4.2 Unit Root Test Result

4.3 Correlation Matrix Analysis

4.4 Ordinary Least Square (OLS) Regression Model Result (Model 1)

4.5 Ordinary Least Square (OLS) Regression Model Result

 ABSTRACT

This study examined the effect of tax revenue of the inclusive growth in Nigeria
between the periods of 1989 and 2021. The Ordinary Least Square (OLS) method of
regression analysis was employed to analyzed the secondary data sourced from the
central bank of Nigeria statistical bulletin, World bank 2021 and the Federal Inland
Revenue Service (FIRS) annual report. The dependent variable (inclusive growth)
with health, Education and Human development index and the independent variables
were measured with corporate tax and value added tax. The regression analysis
result to the study revealed that tax revenue with the log corporate tax as negative
and no significant effect on the human development index of inclusive growth in
Nigeria, value added tax also has a positive and no significant effect on the human
development index and population growth has a negative and a significant effect on
human development index on inclusive growth in Nigeria for the period under
review. On the other hand, using the model 2, the log of degree of Corporate tax has
a positive and insignificant effect on education of inclusive growth in Nigeria, Value
added tax has a positive and insignificant effect on education of inclusive growth in
Nigeria and population growth also has a positive and significant effect on education
of inclusive growth in Nigeria. Lastly, using the third model, the log of corporate tax
has a positive and insignificant effect on health on inclusive growth in Nigeria, log of
value added tax has a negative and insignificant effect on health of Inclusive growth
in Nigeria, and log of population growth has a positive and significant effect on
inclusive growth in Nigeria for the period under review. The study concluded that,
effective tax paid to a particular country can boost the economy inclusively and also
taxation has a statistically significant effect on the economy. In lieu of this, the study
recommends that Expanding the tax base by bringing more individuals and
businesses into the tax net can increase tax revenue without excessively burdening
any particular segment of the population and how possible such action could affect
the inclusive growth in the nearest future.
 CHAPTER ONE

INTRODUCTION

1.1Background of the study

The OECD’s Tax and Economic Growth (OECD, 2008) report has been a key evidential base for

the OECD’s tax policy advice to member countries since its release. The report presented a “tax

and growth ranking” of four major categories of taxes in terms of their negative impact on long-

run GDP per capita. Recurrent taxes on immovable property were found to be least harmful for

economic growth, followed by consumption taxes (including environmentally-related taxes and

other property taxes), personal income taxes, and corporate income taxes. Recently, there have

been calls to move away from a narrow focus on economic growth towards a greater emphasis

on inclusiveness. These calls have been sparked by the rise in income and wealth inequality over

the last 30 years as well as the economic crisis which caused the largest downturn in several

generations. Other challenges such as climate change, ageing populations and international

migration will also have significant distributional consequences that will need to be addressed by

governments. All these challenges will require policies that aim not only at fostering growth, but

at supporting growth which is inclusive.

Inclusive economic growth can be defined as economic growth that delivers progress to society

as a whole. It implies that the benefits of increased prosperity and productivity are shared more

evenly between people and translate into an increase in well-being across society. It should be

mentioned, however, that policies that make the distribution of income more equal are not
always fairer. Some differences in income may be fair in the sense that they reflect differences in

effort and personal tastes for leisure (Cappelen et al., cited by Brys, B. et al. (2016)).

Human development is a strategy to improve human skills, create avenues for people to make

better choices that boost a healthier, longer and fulfilled lives. The predominant aim of every

government’s spending is to guarantee a long and healthy life for the citizens, ensure they are

knowledgeable and enjoy a decent standard of living. Government expenditure on human

development avails a country the opportunity of having a suitable, competent, healthy and

educated labor force to contribute meaningfully to national development. This is because the

quality of human capital in a nation determines its economic development and sustainability.

United Nations notes that Human Development Index (HDI) used as measurement for a nation’s

economic development does not take into cognizance some important human problems such as

poverty, empowerment, inequalities, security and safety. However, the yardstick and elements of

HDI remain the vital aspects of a country’s economy that can lead to growth if duly incorporated

into national budgets and implemented accordingly.

Notwithstanding the fact that power to tax is coterminous with the boundary of the sovereign’s

jurisdiction, taxation in a state may affect economic life in other states, and may influence the

economic indices and the development trajectory of taxing state in diverse ways. For example, a

tax policy that is oriented towards incentives and exemptions is a base for revenue loss and from

the development perspective the lost revenue is lost development opportunity (Abiahu et al.,

2017). The existence of high corporate tax rate in a country or state relative to others is a

disincentive to foreign capital movement; and may cause outflow of capital or its shift to

jurisdictions with less burdensome tax regime. Tax policy is also part of the rationale behind the
competition to attract investment (Aniyie, cited by Okeke et al., [2018]). The primary function of

a tax system is to raise enough revenue to finance essential expenditures on the goods and

services provided by government; and tax remains one of the best instruments to boost the

potential for public sector performance and repayment of public debt (Okoye & Ezejiofor, cited

by Okeke et al., [2018]). In the current global trend of advancing technology and growing

competition, improvement of human capital has become imperative for every nation since it

plays an indispensable role on sustainable economic growth (Barro, 1991; Sala-i-Martin et al.,

cited by Okeke et al., [2018]).

The objective of taxation and tax policy in Nigeria is to achieve some economic benefits which

include among other things income redistribution, revenue generation and achieving economic

growth and economic development (Umoru et al., cited by Ukolobi et al., 2021). Discussion of

issue of economic growth has always been the central point of economic discourse. Good

standard of living depends greatly on the economic situation in a country. It is not only

theoretical to say that bad economy grows where business flourish, likewise, it can also be said

that a wrong tax policy can cripple the economy. Sopko, et al., (2020) stated that decrease in tax

revenue can cause increase in unemployment rate. To avoid this incidence, government must

always find the balance to ensure that tax policies do not hamper the economic growth

(Agunbiade et al., 2020). Tax policies help to shape the international trade and investment

environments. Finding the balance between appropriate tax rate that would be business friendly

and the rate that would generate adequate revenue for government to continue providing its

services is a fundamental challenge facing most African countries (Nigeria inclusive (Ayele,

cited by Ukolobi et al., [2021]). Enacting appropriate tax policies to reduce losses, generate

sufficient revenue for the government, guarantee equitable income and wealth distributions is
challenging task for many governments. Like the direct taxes, indirect taxes have undergone

several tax regimes. Many efforts have been made by the federal government of Nigeria in

ensuring effective and efficient tax laws, this include the Study Group on the Review of the

Nigerian Tax System and Administration which was formed in the 1991 (Ariyo, cited by

Ukolobi et al., [2021]).

Prior to the emergence of the colonial masters, taxation had existed in Nigeria. According to

Samuel, Simon (cited by Adeyemi et al., [2019]), taxation can be seen as a system of imposing

an obligatory levy on all incomes, goods, services and properties of individuals, partnership,

trustees, executorships and companies by the government. Yunusa (cited by Adeyemi et al.,

[2019]) asserts that income taxes (e.g. personal and company income taxes) are the most

fundamental sources of revenues to all government. In the Nigerian context, personal income tax

(PIT) is a factor to be reckoned with in the Federal Government budget, which they give back to

citizens by rendering services or providing basic amenities needed by them. However, this

depends on whether the policy or tax administrative framework in the country is towards

discouraging or encouraging such individuals in paying their tax (Ola, cited by Adeyemi et al.,

[2019]). In Nigeria, PIT is established by the Personal Income Tax Act of 2011 and provides that

personal income taxes are charged at source. PIT is recognized as a very fundamental tool for

national development and growth in most economies of the world and as such, most government

do not toil with it, given the decline in oil price in the country which has led to the decrease in

availability of funds for distribution to all levels of government (Aimurie, cited by Adeyemi et

al., [2019). Aguolu (cited by Adeyemi et al., [2019) argued that though PIT may not be the most

fundamental source of government revenue in terms of magnitude of revenue derivable from

taxation, however, PIT is one of the most fundamental sources of government revenue, from the

viewpoint of certainty and consistency of taxpayers.

Petroleum profit tax is an important source of revenue to the government because of the special

position which petroleum occupies in the Nigerian economy. This tax which is regulated by the

Petroleum Profit Tax Act (1959) as amended is imposed on the profit of oil-producing

companies in Nigeria to raise revenue for the government. It offers an opportunity for

government to collect additional revenue in addition to other sources of income, which is needed

in discharging its pressing obligations. Put succinctly, the essence of petroleum profit tax is to

generate revenue to advance the welfare of the people of a country with focus on promoting

economic growth and development of a country through the provision of basic amenities for

improved public services via proper administrative system and structures.

As increases in well-being are difficult to quantify, income indicators are typically used to

measure inclusive growth. However, inclusive growth should not be evaluated only in terms of

GDP growth or GDP per capita; it should also be seen as economic growth which generates

opportunities for all segments of the population to work, develop and deploy skills, and

contribute to society. In addition, inclusive growth puts emphasis on a more dynamic definition

of equity, which takes into account the impact of policies on people’s income and well-being

over their lifecycle as well as on well-being across generations. More specifically with regard to

tax policy, inclusive economic growth is related to managing tradeoffs between equity and

efficiency. Growth-enhancing tax reforms might come at certain costs in terms of meeting equity

goals so tax design for inclusive growth requires taking into account the distributional

implications of tax policies. In this paper, tax design for inclusive growth is defined as tax policy
which reconciles efficiency and equity considerations. This can be achieved either by

minimizing the trade-offs between efficiency and equity – meaning by reducing the equity costs

of efficient tax reforms or by lowering the efficiency costs of equitable tax reforms – or by

implementing tax reforms that enhance efficiency and equity simultaneously.

In Nigeria, tax revenue has accounted for a small proportion of total government revenue over

the years. This is because the bulk of revenue needed for development purposes is derived from

oil. Crude oil export has continued to account for over 80% of the total federal government

revenue, while the remaining 20% is contributed by non-oil sector in which taxation is a part. For

instance, Oil sector share in total revenue was 54.4% in 1972 against 45.6% share from non-oil

sector the same year. By 1974 oil share of total revenue had reached 82.1% while only 17.9%

accrued from non-oil sector. Following the glut in the world oil prices in the later part of the

1970s, the oil share in total revenue fell to 61.8% in 1978 while non-oil sector’s share rose to

38.2%. And since 1984, the oil sector share in total revenue has continued to rise, though with

occasional falls in between periods. By 2006, oil share of total revenue had reached 88.6%

against non-oil share of 11.4%. As at 2014, oil sector share in total revenue stood at 78.8% while

non-oil sector accounted for just 21.3% of the total revenue (CBN, 2015). Against these

backdrops, it is necessary to verify the effect of taxation on economic development in Nigeria.

Over the years in Nigeria, it has been perceived that income tax revenue has been obviously

understated as a result of unsuitable tax administration arising from under assessment and

inefficient machinery for collection (Adegbie, cited by Obayori et al., [2021]). The Nigeria law

of Companies and Allies Matter Act of 1990 as amended, incorporating all legal provision has

made provision for certain tax incentives for corporate bodies and individuals (Nnubia et al.,
2018). In the meantime, the increasing outflow of investors, and the poor performance of local

industries as a result of inadequate finance, increasing 1cost of production occasioned by

volatility in Naira exchange rate and recent economic recession have returned the attention of

managers of the nation’s economy to the importance and sustainability of taxes, especially tax

incentive to both local industries and foreign investors in order to grow the economy (Obayori et

al., 2019; Afolayan et al., cited by Obayori et al., 2021). Moreover, the incidence of tax evasion

and avoidance by tax payers is high, leading to low level of government revenue which further

reduces the level of government expenditure, culminating into a reduction in the income savings

and expenditure of households and firms, leading to low level of economic activities and

economic growth. Thus, the need for tax incentive became imperative in the face of tax

avoidance and tax evasion.

Oil revenue forms a huge proportion of revenue generated in Nigeria because Nigeria

significantly depends on oil. Nigeria’s over-reliance on oil as a key source of revenue is perilous

and detrimental for its economic growth (Oladipupo et al., cited by Ayeni et al., [2022]).

Globally, the price of oil has dropped dramatically in recent years, therefore, affecting the

government earnings and putting Nigeria in a precarious position as there are no sufficient funds

to be allocated between the three tiers of governments. This was evident in April 2020 when the

price of crude oil was as low as $38 per barrel and compounded with the outbreak of the

COVID-19 pandemic (Gbeke et al., 2021). According to the Economic Recovery and Growth

Plan (ERGP, 2017), the 4.8 percent annual growth rate between 2011 and 2015 was mostly

driven by high oil prices and was generally non- inclusive. Continuing, the majority of Nigerians

are still suffering from severe poverty, inequality, and unemployment, according to this

document (ERGP, 2017). Despite the revenue reported by the government over the years, the
revenue has been insufficient in meeting its social and public spending which is important to

enhance economic growth. Hence, the goal of this study which is to analyze the effects of tax

revenue on inclusive growth by specifically unravelling the effect of direct taxes which include

PPT and indirect taxes which include VAT has affected economic growth. The objective which

this study intends to achieve is to examine the effects tax revenue has on economic growth in

Nigeria. The specific objectives of the study include: to analyze the impact of tax revenue on the

economic growth of Nigeria; examine the effect of company income tax personal income tax and

Value added tax on the economic growth of Nigeria.

1.2 Statement of The Problem

Every country should be able to generate sufficient revenue to take care of her expenses, but

Nigeria like many other developing countries engage in deficit budgeting (Ogundana, et al.,

2017; Ariyo, cited by Ukolobi et al., [2021]). This is caused majorly by the insufficiency of the

revenue base to cope with the desired level of economic growth. The undeniable truth is that the

rate of growth that can be achieved through reliance on tax revenue would be inadequate to meet

desires an aspiration of the public. The generally accepted truth about good tax system is that the

system should be as is practicable, as possible and should not distort investors’ decisions, unless

there is an identified justifiable reason to do so, taxation should not lead to a change in the

decisions of business owners nor negatively affect business process and operation (Onah, cited

by Ukolobi et al., [2021]). The purpose of this is that such changes mean that resources are being

used in ways that are socially inefficient, but are privately profitable only because of taxation

(IMF, OECD, UN & WBG, 2017). The tax system has indicated positive and negative impact on

economy, this is shown through its impact on the welfare of the people as emphasized by

(Azubuike, cited by Ukolobi et al., [2021]). There are also some arguments that Direct and
indirect taxes have differential effects on economic growth (Avi-Yonah et al., cited by Ukolobi

et al., [2021]). Direct taxation account for two third of the total tax revenue generated in

advanced countries, however, the use of indirect taxation has been advocated by studies which

recommend that developing countries should focus on indirect taxation (Avi-Yonah et al., cited

by Ukolobi et al., 2021).

Available record shows that the Nigerian education sector has consistently received less

allocation than advocated by UNESCO. The standard funding requirement for education

prescribed by this UN agency is that every country should allocate at least 26 percent of its

annual budget to its education sector. On the average, Nigeria spends less than nine per cent of

its annual budget on education. Even this paltry amount does not seem to be efficiently utilized

in funding education in the country. The country’s educational system is beset with a lot of

problems like school closure occasioned by teachers and lecturers strike

As Nigeria strives to be in the league of the first twenty most developed economies of the world

by 2020, it is crucial at this point that government’s efforts at developing sufficient skilled

manpower to meet the political, social, institutional, technological, and economic demands of

vision 2020 be subjected to efficiency evaluation, particularly in the education sector. Most of

the past studies on Nigeria’s human capital development focused on its impact on economic

growth and development. However, very few studies were

The purpose of the indirect tax is to benefit the economy, however different studies (Edame et

al., cited by Ukolobi et al., [2021]); Osundina et al., cited by Ukolobi et al., [2021]), Ebiringa

(cited by Ukolobi et al., [2021]) and (Atawodi et al., cited by Ukolobi et al., [2021]), have
found negative relationship between the tax revenue and economic growth while some other

studies have found negative impact of tax system and revenue on inclusive growth (Salami et al.,

(cited by Ukolobi et al., [2021]); Okoli (cited by Ukolobi et al., [2021]), Oyewo (cited by

Ukolobi et al., [2021); Okafor (cited by Ukolobi et al., [2021]); Ogbonna et al., (cited by Ukolobi

et al., [2021) and Abiola et al., (cited by Ukolobi et al., [2021]). In Nigeria, tax revenue has

accounted for a small proportion of total government revenue over the years compared with the

bulk of revenue needed for development purposes that is derived from oil. The serious decline in

the prices of oil in recent times has led to a decrease in the funds available for distribution to the

federal, state and local governments (Afuberoh et al., 2014). Consequently, dependence on oil as

a particular or main source of revenue in Nigeria has become risky and not beneficial for

sustainable economic growth. Moreover, this study aims to examine the effect of tax revenue on

inclusive growth in Nigeria thereby filling a lacuna that had not been examined by any study.

Laura (2019) investigated the effect of indirect tax on economic growth as a possible means of

diversifying revenue generation in Nigeria. Ordinary Least square technique of data analysis was

adopted by the study. Johansen cointegration and Vector Error Correction Model was used to

find the short-run and long-run relationship between the variables. The study found insignificant

but positive relationship between indirect tax and economic growth. Contrary to the result, the

study recommend that the government should increase number of goods on which VAT is

chargeable.

Ojong, et al., (2021) examined the impact of tax revenue on economic growth in Nigerian, with

the main focus on the relationship between company income tax, petroleum profit tax, non-oil

revenue and economy growth. The study adopted OLS regression models to determine the

relationship between the independent variables and dependent variable. The study found
significant positive relationship between petroleum profit tax, non-oil revenue and the economic

growth and that no significant relationship between company income tax and economic growth.

The study recommends that to increase tax revenue, government should create more employment

opportunities and good environment for entrepreneurship to thrive in the country.

The efficacy of tax revenue on Nigeria’s inclusive growth has not been tested by any of the

articles examined. Therefore, this study will examine how tax revenue affect inclusive growth in

Nigeria using inclusive growth as the research gap which had not been tested by any articles.

1.3 Research Question

1. What is the effect of tax revenue on health in Nigeria?

2. what is the impact of tax revenue on education in Nigeria?

3. What is the impact of tax revenue on human development index in Nigeria?

1.4 Research Objectives

The broad objective of the study is to examine the impact of tax revenue on inclusive growth in

Nigeria. The specific objectives are;

1. To assess the effect of company income tax on health in Nigeria.

2. To Explore the effect of tax revenue on education in Nigeria

3. To evaluate the effect of tax revenue on human development index in Nigeria

1.5 Research Hypotheses

The following hypothesis have been formulated and will be tested in the course of this study.

HO1. Tax revenue has no significant relationship on Health in Nigeria

HO2. Tax revenue has no significant effect on Education in Nigeria

HO3. Tax revenue has no significant positive effect on Human development index in Nigeria

1.6 Significance of Study

The study on the effect of tax revenue on inclusive growth holds significant importance for

various stakeholders. The findings can inform policymakers about the relationship between tax

revenue and inclusive growth. This knowledge can help in designing and implementing effective

tax policies that promote equitable economic development, reduce poverty, and enhance social

welfare. Understanding how tax revenue impacts inclusive growth can assist governments in

long-term economic planning. It enables them to allocate resources efficiently, identify areas for

investment, and create an environment conducive to sustainable and inclusive development. Tax

revenue plays a crucial role in redistributing wealth within a society. This study can shed light on

how different tax policies affect income distribution, poverty levels, and socioeconomic

disparities. Such insights can aid in designing progressive tax systems that reduce inequality and

promote social cohesion. Businesses are affected by tax policies, and understanding their impact

on inclusive growth can provide valuable insights for entrepreneurs, investors, and industry

stakeholders. It can guide business strategies, investment decisions, and corporate social
responsibility initiatives to align with inclusive growth objectives. The study's findings can have

implications for international development organizations and agencies working towards poverty

reduction and sustainable development. By understanding the relationship between tax revenue

and inclusive growth, these organizations can provide informed guidance and support to

countries in achieving their development goals.

1.7 Scope of the Study

The study examines tax revenue and inclusive growth in Nigeria. The period of the study covers

from 1991 -2021 (31) years, to fully examine the effect of tax revenue on inclusive growth in

Nigeria. The length of the study period is appropriate since it corresponds to past studies that had

thirty to forty-year span. Tax revenue as the independent variable for the study will cover tax

variables such as; personal income tax, value added tax, company income tax, petroleum profit

tax. Health, education and human development index will be used to capture inclusive growth in

Nigeria.

Definition of Terms

AD VALOREM TAX: This is a tax on goods or property expressed as a percentage of the sales

price or assessed value.

ASSOCIATED ENTERPRISES -- Generally speaking, enterprises are associated where the

same persons participate directly or independently in the management, control or capital of both

enterprises, i.e. both enterprises are under common control.

3. AVOIDANCE -- A term that is difficult to define but which is generally used to describe the

arrangement of a taxpayer's affairs that is intended to reduce his tax liability and that although
the arrangement could be strictly legal it is usually in contradiction with the intent of the law it

purports to follow. Cf. evasion.

4.BRANCH TAX -- These are taxes imposed on branches of foreign companies in addition to

the normal corporate income tax on the branch's income. This is equivalent to the tax on

dividends which would be due if the branch had been a subsidiary (see: subsidiary company) of

the foreign company and had distributed its profit as dividends.

5. CENTRAL MANAGEMENT AND CONTROL --This is a place, where the central

management and control is located is a test for establishing the place of residence of a company.

Broadly speaking, it refers to the highest level of control of the business of a company.

6.COMPETENT AUTHORITY (CA): This is a Forum to resolve disputes arising from the

application and/or interpretation of a double tax treaty. Both treaty countries appoint a

representative (frequently the Ministry of Finance or its authorized representative) as the CA to

assist aggrieved taxpayers by acting as the official liaison with the foreign CA. The CA is

generally indicated in the definition’s sections of tax treaties

7.CONTROLLLED FOREIGN COMPANIES (CFC): These are Companies, usually located in

low tax jurisdictions, that are controlled by a resident shareholder. CFC legislation is usually

designed to combat the sheltering of profits in company’s resident in low- or no-tax jurisdictions.

An essential feature of such regimes is that they attribute a proportion of the income sheltered in

such companies to the shareholder resident in the country concerned. Generally, only certain

types of income fall within the scope of CFC legislation, i.e. passive income such as dividends,

interest and royalties.

8. CORRESPONDING ADJUSTMENT: These are adjustment to the tax liability of the

associated enterprise in a second jurisdiction made by the tax administration of that jurisdiction,

corresponding to a primary adjustment made by the tax administration in a first tax jurisdiction,

so that the allocation of profits by the two jurisdictions is consistent

9.CREDIT, FOREIGN TAX -- This is a method of relieving international double taxation. If

income received from abroad is subject to tax in the recipient's country, any foreign tax on that

income may be credited against the domestic tax on that income. The theory is that this means

foreign and domestic earnings of an entity will as far as possible be similarly taxed, although

usually the credit allowed is limited to the amount of domestic tax, with no carry over if tax is

higher abroad

10.CREDIT, WITHHOLDING TAX: These are where various kinds of income (such as

dividends, interest, royalties) are taxed at source by requiring the payer to deduct tax and account

for it to the tax authorities (abroad). The taxpayer recipient is entitled to credit the tax withheld at

source against his final tax liabilities determined by (domestic) tax law of the country in which

he is resident.

11. DEFERMENT OF TAX -- The postponement of tax payments from the current year to a

later year. A number of countries have introduced legislation to counter the kind of tax avoidance

whereby a taxpayer obtains a deferment of tax which is not intended by law. Ex) CFC legislation

12. EFFECTIVELY CONNECTED INCOME (ECI) -- Non-resident alien individuals and

foreign corporations engaged in trade or business within the US are subject to US income tax on

income, from sources both within and outside the US, which is "effectively connected" with the

conduct of the trade or business within the US. Income is effectively connected if it is derived
from assets which are used in or held for use in the US, and the activities of the US business

were a material factor in the realization of the income.

13. EXCHANGE OF INFORMATION -- Most tax treaties contain a provision under which the

tax authorities of one country may request the tax authorities of the other country to supply

information on a taxpayer. Information may only be used for tax purposes in the receiving

country and it must be kept confidential, i.e. it can only be disclosed to the persons or authorities

concerned with the assessment or collection of taxes covered by the treaty.

14.FORCE OF ATTRACTION: Concept under which a permanent establishment is taxed by the

country in which it is located not only on the income and property, but also on all income

derived by its foreign head office from source in, and all property owned by the foreign head

office situated in, the country where the permanent establishment is located. The OECD model

treaty does not allow application of it.

15.FRINGE BENEFITS: These are benefits supplementing normal wages or salaries. Fringe

benefits may be given in the form of a money allowance, e.g. a holiday bonus or in the form of

benefits in kind, e.g. free accommodation. Although most countries tax the benefit of employer-

provided automobiles and accommodation, the tax treatment of other fringe benefits varies

considerably.

16.HEDGING TRANSACTION: This is transaction where a person tries to protect himself

against price, interest rate or foreign exchange rate fluctuations, for example, by buying or

selling commodities or currencies using derivative contracts such as forwards, futures, options

and swaps.
17. IMPUTED INTEREST: Implied interest. In a mortgage that states an insufficient interest

rate, tax law will impute a higher rate and a lower principal, which will increase taxes on the

receipt of payment.

18.INDEPENDENT PERSONAL SERVICES: Services performed by an independent

contractor. An independent contractor is hired to do work according to his own methods and is

not subject to the control of an employer except as to the result of his work. With the removal of

Article 14 from the OECD Model, this issue is now dealt with by Article 7 as business profits in

most cases.

19. LEGAL ENTITY: Generally, corporations, joint-stock companies and limited liability

companies are regarded for tax purposes as having an existence separate from that of their

shareholders. Conversely, for tax purposes a partnership is often not regarded as a separate legal

entity, its profits being taxed in the hands of the individual partners. What constitutes a legal

entity for tax purposes may or may not coincide with what constitutes a legal entity for general

law purposes.

20. LONG-TERM CAPITAL GAINS: In countries where capital gains are subject to special tax

treatment, a distinction may be made between capital gains realized after a short period of time

and capital gains realized after a longer period of time. Long-term capital gains may be taxed at

reduced rates.
 CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter contains the review of literature related to this research work. It is divided into the

conceptual review, theoretical review and empirical review. The conceptual review will explain

in details the different concept in the study, the theoretical review focuses on theories related to

the study. Further, the empirical study appraisals the research of other researchers related to the

study.

2.1 Conceptual Clarification

Public expenditure by any governmental authority whether central, regional or local, is financed

primarily through tax revenues. The impact of such taxes on inclusive growth can only be

positive if the taxes levied create the right incentives (depending on economic activities) for the

efficient allocation of resources in a country (Amahalu et al., 2017). In addition, in order to

improve the welfare of its citizens, a prudent government adopts fiscal policies with a tax

structure that maximizes positive externalities, and that minimize negative externalities, such as

pollution and corrupt practices. The relationship between taxation and economic development
has been studied with different findings (for instance, Jibrin, cited by Okeke et al., [2018]

Saheed, cited by Okeke et al., [2018])

2.1.1. Taxation

Taxation is a compulsory but non-penal levy by the government through its agent on the profits,

income, or consumption of its subjects or citizens. It is also viewed as a compulsory and

obligatory contribution made by individuals and organization towards defraying the expenditure

of government (Onaolapo, cited by Okeke et al., [2018]). Ebimobowei, cited) posit that it is a

charge levied by the government on the income or wealth of a person or corporate organization

for the common benefit of all. The term does not include specific charges made against a

particular person or properties for current or permanent benefits and privileges accruing only to

those paying such charges. Similarly, Oboh, cited by Okeke et al., [2018]) define taxation as the

transfer of real economic resources from private sector to the public sector to finance public

sector activities. It may be inferred from the foregoing that taxation is the transfer of financial

resources from private economic agents like households and corporate bodies, to the public

sector to finance the development of the society. Incentives is reduction in the effective tax

burden on the favored activity as against that normally imposed upon it, in the hope that the

reduction in government revenue will be compensated by an expected expansion of the national

economy and ultimately by resulting increases in total revenue from such broadened economic

basis. According to Sanni, cited by Obayori et al., (2021), tax incentive is a deliberate reduction

in or total elimination of tax liability granted by the government in order to encourage a

particular economic unit to act in some desirable ways. The desirable ways maybe to invest

more, employ more, export more and import less. Tax incentive is a generic term for all the
measures adopted by the government to deliberately manipulate the tax system to the advantage

of potential taxpayer (Dotun, cited by Obayori et al., [2021]). Tax incentive could be in the form

of investment allowance, annual allowance, research and development and free trade/export

processing zones. All these forms of incentives are operationalized to encourage investment and

increase the level of employment, reduction in poverty and increased the growth of the economy.

2.1.1.1 Classification of Taxes.

Taxes can be grouped into direct taxes and indirect taxes.

Direct tax is a type of tax that is charged exactly on an individual or an organization, and which

the individual or organization is required to pay by way of a notice known as an assessment

notice. A taxpayer must have been informed of such tax payments. They are taxes that are

remitted directly to the government by companies and individuals (Omodero et al., 2021). Types

of taxes that fall under direct tax include Petroleum Profit Tax, Withholding Tax, Capital Gains

Tax, Company Income Tax and Stamp Duties.

Indirect tax is a tax that is paid by another person on behalf of the ultimate tax burden bearer.

There are different types of indirect taxes, which include sales tax, excise duty, VAT, service tax,

entertainment tax, custom duty. Value Added Tax is a levy on the consumption of goods and

services (Ikeokwu & Micah, 2019). Adoption of Value Added Tax in Nigeria was a major

reform in the Nigerian tax system. Currently VAT is shared in the ratio of 15:50:35 among the

federal, state and local governments. The state allocation is based on state of origin, consumption

and equality of state and to be shared in 30%, 30% and 40% respectively on those basis. The

major purpose of indirect taxes is to generate revenue for government, but the tax can also be

used to control consumption of certain goods and services

2.1.1.2 Types of Tax Revenue

. There are various types of tax revenue, and they differ depending on the taxing authority and

the specific tax system in place. Here are some common types of tax revenue:

1. Income Tax: This is a tax levied on the income earned by individuals and businesses. It can

be progressive, where the tax rate increases as income levels rise, or flat, where the same tax rate

applies to all income levels.

2. Corporate Tax: A tax imposed on the profits earned by corporations and other business

entities. Corporate tax rates can also vary based on the jurisdiction and the size of the business.

3. Sales Tax: Also known as a consumption tax, this is a tax imposed on the purchase of goods

and services. It is usually calculated as a percentage of the purchase price.

4.Value Added Tax (VAT): Similar to a sales tax, a VAT is levied at each stage of the

production and distribution process. It is based on the value added to a product or service at each

stage of production and is ultimately borne by the end consumer.

5. Property Tax: This tax is levied on the value of real estate or other properties owned by

individuals or businesses. The tax amount is typically determined based on the property's

assessed value.

6. Gains Tax: This tax is applied to the profits generated from the sale of assets, such as stocks,

real estate, or other investments.

7. Estate Tax: Also known as inheritance tax, this is a tax on the transfer of a deceased person's

estate to their heirs or beneficiaries.

8. Payroll Tax: These taxes are withheld from employees' wages by employers and are used to

fund social security, Medicare, and other social welfare programs.

9. Excise Tax: This tax is imposed on specific goods or services, such as tobacco, alcohol,

gasoline, or luxury items.

10.Customs Duties: Taxes imposed on goods imported or exported between countries. They are

often referred to as tariffs.

2.1.2 Tax policy and compliance

Tax Leakages

Capital or income that leaves an economy or system rather than remaining inside it is referred to

as leakages. An outflow from a circular flow of revenue model is referred to as this. It occurs

when income is depleted due to taxes, savings, and other sources of income. Tax leakages relate

to revenue lost as a result of the financial system's numerous loopholes. Tax leakages, also

known as revenue leakages, have long plagued the services and transaction-based industries,

eroding profit margins (Hariharan, 2009) cited in (Okoye, et al, 2018). When compared to

industrialized economies, the factors responsible for tax evasion in Nigeria and other emerging

nations are tremendous. These could be linked to the development process, which most

industrialized countries have successfully navigated over time. Corruption is the most worrying

aspect that promotes revenue leakages in Nigeria, according to Kiabel & Nwokah (2009) as

mentioned in (Okoye, et al, 2018). Mismanagement of tax funds, illiteracy among tax payers,

low standard of living, and so on are some factors that contribute to tax leakages, according to

Onyewuchi cited by Ehiedu et al., [2022]

Tax evasion
 Tax evasion is the intentional and purposeful failure to disclose all taxable income to tax

authorities in order to pay less tax. It is a violation of tax regulations when a taxable individual

fails to pay the tax due or decreases his or her tax burden by making false or fraudulent

statements on the income tax form (Soyode & Kajola,). (Okoye, et al, 2018). Tax evasion occurs

when a taxpayer refuses to pay tax or tries to reduce his tax liability in an illegal manner. It was

defined by ICAN (2004), as mentioned in (Okoye, et al, 2018), as fraud and deception by

intentionally refusing to declare all sources of income on tax filings or understating income on

tax forms. Tax evasion can be whole or partial, according to Gourama, Mansor, and Pantanmee

(2015), as referenced in Okoye, et al, 2018. It is complete when a citizen who is eligible to pay

tax refuses to register for the purpose of paying tax, but it is partial when a tax payer manipulates

his income to lower his tax burden.

Tax avoidance

This essentially means lowering or avoiding one's tax burden. The tax payer strives to maximize

all exemptions, deductions, concessions, allowances, and other tax relief or benefits available

under the law (Ihuoma, cited by Ehiedu et al., (2022) mentioned in (Okoye, et al, 2018). Tax

avoidance, according to Anyafa, cited by Ehiedu et al., (2022), is an attempt to avoid culpability

by evading the law rather than breaking it; he refers to a tax payer's attempt to avoid paying tax

by using a legal gap in the tax system. Tax evasion is a lawful practice that aims to save money

by lowering taxable income. Tax can be avoided by turning taxable income into nontaxable

income at a lower bracket rate. For example, business owners who are aware that tax is levied on

profits may declare no profit and claim that they did not make any. Also, in the event of estate
tax, tax could be avoided by designating gifts to charity organizations, educational institutions,

research, and religious organizations.

2.1.3. Principles of Tax Revenue

These tax revenues are essential for funding various public services and government

expenditures. There are several principles that underpin tax revenue systems. Here are some of

the key principles:

1. Equity or Fairness: The of equity states that the tax burden should be distributed fairly

among taxpayers based on their ability to pay. This often translates into progressive taxation,

where higher-income individuals are taxed at higher rates, and regressive taxation, where lower-

income individuals pay a higher proportion of their income in taxes.

2. Simplicity: A tax system should be simple and easy to understand for both taxpayers and tax

administrators. A complicated tax system can lead to confusion, errors, and increased

compliance costs.

3. Efficiency: An efficient tax system aims to minimize distortions in economic behavior. High-

efficiency taxes create fewer disincentives for work, investment, and consumption. Broad-based

taxes with low rates are generally more efficient than narrow-based taxes with high rates.

4. Transparency: The tax system should be transparent, with clear rules and procedures.

Transparency helps build public trust and understanding of the tax system.

5. Adequacy: Tax revenue should be sufficient to meet the government's spending needs and

obligations. Adequacy ensures that the government can provide essential services, infrastructure,

and other public goods.

6. Neutrality: A neutral tax system does not favor or discourage specific economic activities or

behaviors. Neutrality helps prevent the government from influencing market choices and

promotes economic efficiency.

7. Flexibility: A tax system should be adaptable to changing economic and social circumstances.

Flexibility allows the government to respond to economic fluctuations and evolving societal

needs.

8. Administrative Feasibility: A tax system should be practical and cost-effective to administer.

Complex tax laws and regulations can lead to difficulties in enforcement and compliance.

9. Stability: Stability in tax policy provides certainty for taxpayers and businesses, encouraging

investment and economic growth. Frequent changes to tax laws can create uncertainty and deter

investment.

10. Public Acceptance: For a tax system to be effective, it must have public acceptance and

support. This support is more likely when taxpayers perceive the tax system as fair and when

they can see the benefits of the taxes they pay in the form of public services and infrastructure.

Governments strive to strike a balance between these principles, as they may sometimes conflict

with one another. Designing an effective tax revenue system involves careful consideration of

these principles and their potential impact on various segments of society and the economy.

4.1.5. Concept of Inclusive Growth

The inclusive growth of a country is a function of many factors including revenue of the

government (Chude cited by Ukolobi et al., [2021]; Aigheyisi, 2017). Economic growth has not

always been smooth in Nigeria, nevertheless, the country enjoyed consistent growth between

2004 and 2014, and the growth rate began to fall in 2015. The growth rate became worse in
2016, the country recorded a negative growth rate of -1.62 in GDP. Edame cited by Ukolobi et

al., [2021]) was of the opinion that the fall in GDP was as a result of the fall in price of oil in the

international market. However, the growth rate between 2004 and 2014 was as a result of non-oil

sector (Ikeokwu & Micah, 2019). Therefore, it can be said that the present administration has

failed in improving the non-oil sector, and relied heavily on oil revenue, which fluctuate

frequently. Growth in economy can boost the standard of living as per capita income will

increase also (Ikeokwu & Micah, 2019). Economic growth is the capacity of a nation to produce

goods and services required to improve the standard of living of her citizens (Ezirim, cited by

Ukolobi et al., [2021). It is also the increase in the quantity of goods and services produced in the

country over time (Anyanwu & Oaikhenan. cited by Ukolobi et al., [2021). Per capita income is

an increase in fundamental aspects of human development, which include access to education,

access to good health care and decent living standard. Economic development is about

positioning the economy on a higher growth trajectory. Economic development is the product of

long-term investments in the generation of new ideas, knowledge transfer, and infrastructure, and

it depends on functioning social and economic institutions and on cooperation between the

public sector and private enterprise. Economic development depends on education so that

workers can more fully participate in the economy, social and cultural patterns of behavior that

encourage initiative and engagement, and cooperation rather than adversarial relationship

between government and business. proxies for inclusive growths are:

4.1.5.1 Human Development Index (HDI)

The human development index is a statistical tool employed to generally assess a nation’s social

and economic attainment in all ramifications. The social and economic dimensions of a country

are centered on the health of people, their educational accomplishments and standard of living
(The Economic Times, 2018). HDI is one of the best tools to keep track of the level of

development of a country, as it combines all major social and economic indicators that are

accountable for economic development of a nation (TET, 2018).

4.1.5.2 Education

Available record shows that the Nigerian education sector has consistently received less

allocation than advocated by UNESCO. The standard funding requirement for education

prescribed by this UN agency is that every country should allocate at least 26 percent of its

annual budget to its education sector. On the average, Nigeria spends less than nine per cent of

its annual budget on education when smaller African nations like Botswana spend 19.0%;

Swaziland, 24.6%; Lesotho, 17.0%; South Africa, 25.8%; Cote d’Ivoire, 30.0%; Burkina Faso,

16.8%; Ghana, 31%; Kenya, 23.0%; Uganda, 27.0%; Tunisia, 17.0%; and Morocco, 17.7%

(Kupoluyi, 2012).

Education policy issues continue to be a question of critical concern in developing countries like

Nigeria, particularly issues bordering on adequate funding. The relationship between education

and development has been established, such that education is now globally accepted as a key

development index and it is in appreciation of this significance that the Nigerian government like

other national governments has developed extensive educational policies aimed at granting her

citizens access to education (Odukoya, 2009).

4.1.6. Relationship between Tax Revenue and Inclusive Growth

Tax revenue plays a crucial role in fostering inclusive growth in Nigeria (Ajakaiye, 2018). As the

government collects taxes, it can allocate funds to various social and economic development

programs, such as education, healthcare, infrastructure, and poverty alleviation initiatives. These
investments in turn empower citizens, create job opportunities, and stimulate economic activity,

leading to a more inclusive and equitable society.

By generating substantial tax revenue, Nigeria can improve public services, enhance human

capital, and reduce income inequality. Additionally, a well-structured tax system can encourage

wealth redistribution and promote investment in marginalized regions, contributing to a more

balanced and sustainable economic development (IMF, 2020).

However, for tax revenue to have a positive impact on inclusive growth, it is essential that the

government ensures transparency, accountability, and efficient use of collected funds.

Mismanagement or corruption in the tax system can hinder the intended benefits and exacerbate

inequality.

In conclusion, a robust tax revenue system, when managed effectively and used wisely, can be a

significant driver of inclusive growth in Nigeria, fostering prosperity and well-being for all

citizens (World Bank, 2021).

2.2 Theoretical Review

2.2.1 Endogenous or New Growth Theory

Endogenous growth theory or new growth theory was developed in the 1980s, as a response to

criticism of the neo classical growth model. The endogenous growth theory holds that policy

measures can have an impact on the long – run growth rate of an economy. Endogenous growth

economists believe that improvements in productivity can be linked to a faster pace of innovation

and extra investment in human capital. Endogenous growth theorists stress the need for
government and private sector institutions and markets which nurture innovation, and private

incentives for individuals to be inventive. The theory also provides a central role for knowledge

as a determinant of economic growth. The theory underpinning this study is the Endogenous

Growth Theory pioneered by Romer (Cited by Omodero 2019). The theory encourages

government expenditure on human capital development and technological advancement as the

major drivers of economic growth. Endogenous growth theory holds that economic growth

depends on investment in human capital, innovation and knowledge management (Romer, 1994).

The theory also focuses on positive externalities and spillover effects of a knowledge-based

economy which leads to economic development. Policy effects emanating from this model are

connected to the potential for externalities spillovers coming from the wealth of knowledge and

perhaps labor force skills. Economies, which have abundance in those factors, can grow faster

than the ones limited by their unavailability. By examining policy, the most essential ways to

foster growth is to enhance the educational levels of the labor force. Thus, based on this model,

education, as a positive spillover, is crucial to growth. Since many developing countries have

constraints regarding education and related issues, it is key for governments in those countries

trying to prioritize improvements on education and provide subsidies for research and

development (Augusto, et al., cited by Omodero 2019). Government spending on education

(research and development), healthcare, job provisions and capacity building helps to access a

common pool of knowledge emanating from global technological spillovers and these are very

essential for economic development of a nation.

2.2.2 Traditional Economic School of thought

Accordingly, the traditional economic school of thought, averred that if other factors affecting

growth are held constant, low tax rates and low government spending will bring about higher
growth (Barro (cited by Obayori et al., [2021]; Slemrod, cited by Obayori et al., [2021]). This

means that the higher the marginal tax rate, the greater the chances of higher income tax payers

diverting extra time from productive operations to leisure activities.

2.2.3 Modern Economic School of Thought

The modern school of thought revealed that higher marginal tax rates leads to greater economic

development in the long-run because government would secure a greater revenue which when

invested in the country’s education and infrastructure development will boost the growth of the

economy. From the point of view of economic theory, marginal tax rates are particularly

important because they affect the incentives of individuals to earn more income. Consequently,

as marginal tax rates increase, individuals will keep less of their additional earnings. While

economic theory predicts a negative relationship between marginal tax rates and economic

growth.

2.3 Empirical Review

Harelimana[2018] determine the effect of tax audit on revenue collection in Rwanda using both

primary and secondary data. The method of analysis adopted is a descriptive approach. Both

Primary and secondary data was used and then analyzed through SPSS version 21. Data analysis

involved statistical computations for averages, percentages, and correlation and regression

analysis. Ordinary least squares (OLS) regression method of analysis was adopted to determine

the inferential

statistics. The independent variable is tax audit and the proxies used are Tax Administration,

Tax Revenue Performance, Tax Revenue collection, while the dependent variable is Revenue

collection and the proxy used is RRA. From the Findings, tax administration, tax revenue

performance, revenue protection system, tax automation to a constant zero, revenue collection
would be at 0.347. A unit increase on Tax administration would lead to increase in revenue

collection by a factor of 0.162, a unit increase in tax revenue performance would lead to increase

in revenue collection by a factor of 0.282, a unit increase in revenue protection system would

lead to increase in revenue collection by a factor of 0.162, a unit increase in tax revenue

performance would lead to increase in revenue collection by a factor of 0.282, a unit increase in

revenue protection system would lead to increase in revenue collection by a factor of 0.194 and

unit increase in tax automation would lead to increase in revenue collection by a factor of

0.211. The study concluded that, Therefore Tax audit actually has an effect to revenue collection

as according to the t–tests there is significance in the correlation between tax collected before the

audit and after the audit. This clearly indicates that tax audit increases revenue collection. That in

essence means that the more the tax audit Conducted the more revenue is collected. Thus, the

remark is a need for a study on how the size of a company influences the auditing as there is

variation for various organizations based on the size.

Raouf[2022]examine the impact of financial inclusion on tax revenue in EMEA countries Using

panel data on 45countries in Europe, the Middle East, and Africa (EMEA) over the period 2008

to 2019. The tools of analysis employ a panel threshold regression model to address the key

issue of whether changes in tax revenue are linked to changes in financial inclusion. We use a

generalized method of moments model to test the robustness of the result. IV: deposit accounts

with commercial banks (X1), outstanding deposits with commercial banks (X2), outstanding

loans from commercial banks (X3) was used to proxy Financial inclusion in the independent

variable, while percentage of gross domestic pro

duct was used to proxy tax revenue in the dependent variable. The result of the study shows a

nonlinear relationship between financial inclusion and tax revenue, which indicates that, at low

levels, financial inclusion has a negative impact on tax collection, whereas, at the high level,

financial inclusion has a positive and significant impact on tax revenue. In conclusion, this paper

can help decision-makers to find the ideal level of financial inclusion, particularly in countries

where financial inclusion is a priority. As a result, they can set policies to target the appropriate

degree of financial inclusion to get the optimum tax revenue.

Ndoricimpa[2021] examines how tax performance is associated with tax reforms and civil

conflicts in Burundi. This study uses data from different sources covering the period 1972-2015.

Tax revenue is from the various reports of the Central

Bank of Burundi; tax reforms as a dummy variable is compiled using the Burundian General

Tax Code, different IMF country reports on Burundi, reports from the Ministry of Finance, and

Burundi Revenue Authority; civil conflicts is compiled using the political history of Burundi.

The results from regression analysis on a tax equation indicate that total tax revenue,

international trade taxes and income taxes, are not associated with civil conflicts. However, taxes

on goods and services are found to be negatively associated with civil conflicts. The properties of

the variables used are examined using Augmented Dickey-Fuller (ADF) unit root test. The study

uses tax reform as the independent variable and the proxies used is civil conflicts (CIVCO), tax

reforms (TREF), tax base(TB), while the dependent variable is civil conflict and the proxy is real

tax revenue (total tax or disaggregated tax) The results show also that total tax revenue and the

tax categories are not associated with tax reforms. The reasons why tax revenue performance

may not have been associated with tax reforms, include the prevalence of fiscal corruption, the
negative effects of conflicts on the economy, abusive tax exemptions, and failure to on widening

the tax base. The remark explained that, there is a need to rethink the implementation of tax

reforms in Burundi to enhance their effectiveness.

Gnangnon[2021] explore the effect of non-resource tax revenue instability on non-resource tax

revenue in developed and developing countries. The sample of analysis used is 146 countries

over the period 1981–2016. The data analysis has used an unbalanced panel. The analysis used

data set as well as the two-step system generalized methods of moment approach. The dependent

variable is Non resource tax revenue, while the independent variable is non resource tax revenue

instability. The empirical analysis has suggested that non-resource tax revenue instability

influences negatively non-resource tax revenue share of gross domestic product. The magnitude

of this negative effect is higher in less developed countries than in relatively advanced countries.

This negative effect materializes through public expenditure instability: non-resource tax revenue

instability exerts a higher effect on no resource tax revenue share as the degree of public

expenditure instability increases. Finally, non-resource tax revenue instability exerts a higher

effect on non-resource tax revenue share as the degree of public expenditure instability increases.

Finally, non-resource tax revenue instability exerts a higher negative effect on non-resource tax

revenue share as economic growth volatility rises, inflation volatility increases and terms of trade

instability increases. It concluded that the severity of the current COVID-19 pandemic shock

(which is a supply and demand shock) and the macroeconomic uncertainty that it has generated –

inter alia, in terms of economic growth instability, terms of trade instability, inflation volatility

and public expenditure instability – are likely to result in severe tax revenue losses. Governments

in both developed and developing countries would surely learn from the management of this
crisis so as to prepare for possible future economic, financial and health crises with a view to

dampening their adverse macroeconomic effects, including here their negative tax revenue

effects.

Pratomo[2020] research paper is to study the effect of Foreign Direct Investment (FDI) on tax

revenue in developing countries. This research uses secondary data at the country level that

cover

up to 80 countries over the period 2000 until 2016. Data of FDI net inflow was collected from

the open data of the World Bank. The data analysis used was started with Fixed Effect Model

(FEM) of panel data and followed by 2SLS regression the independent variable is FDI net

inflow, greenfield, and brownfield FDI, while the dependent variable is Tax revenue. Using

panel data analysis, this research finds that FDI net inflow has a positive correlation on total tax

revenue, corporate tax revenue, individual tax revenue, and VAT revenue. However, the effect of

FDI net inflow on property tax revenue is not statistically significant. This research also finds

that in the developing countries, the greenfield FDI has a beneficial effect on tax revenue while

brownfield FDI tend to erode tax revenue. Inconclusion, by attracting greenfield FDI, tax

revenue is expected to increase due to an increase in the number of taxpayers, an increase in the

country’s productivity, and a reduction in unemployment. On the other hand, in high-income

countries, the policymakers should open more opportunities for mergers and acquisition

(brownfield FDI) or forming joint ventures with foreign companies in order to increase

productivity that finally will increase tax revenue. This method might be useful in reducing the

cost of establishing new companies in high-income countries. In addition, since in developing

countries the effect of greenfield FDI on total tax revenue is greater compared to brownfield FDI,

policymakers should focus on inviting a new investor to establish a new company.

Ouma[2019] investigated the effect of tax reforms, economic growth and political environment

on total tax, direct tax and indirect tax revenue. using annual data for the period 1964-2016. The

data analysis used is descriptive statistics, multi-segment regressions and nonlinear regression.

The independent variable is tax reform, economic growth proxied by government effectiveness

and corruption effect while the dependent variable is political environment proxied by tax

revenue. Results show that: all taxes responded positively to each of the tax reforms; Results

show that: all taxes responded positively to each of the tax reforms; changes in all taxes were

affected by the reforms because GDP was also growing; economic growth has positive

significant effect on all the categories of taxes; Government effectiveness has positive impact on

indirect taxes; and that even though government control of corruption effect on tax revenues is

statistically insignificant, it could promote the revenue generation more than economic growth.

These findings have a number of policy implications: the government should put more emphasis

on governance in order to promote revenue collection. Government effectiveness and control of

corruption would go a long way to enhance tax compliance, reduce tax avoidance and evasion,

eliminate illicit flows and reduce illegal collusion changes in all taxes were affected by the

reforms because GDP was also growing; economic growth has positive significant effect on all

the categories of taxes; Government effectiveness has positive impact on indirect taxes; and that

even though government control of corruption effect on tax revenues is statistically insignificant,

it could promote the revenue generation more than economic growth. These findings have a

number of policy implications: the government should put more emphasis on governance in
order to promote revenue collection. Government effectiveness and control of corruption would

go a long way to enhance tax compliance, reduce tax avoidance and evasion, eliminate illicit

flows and reduce illegal collusion Results show that: all taxes responded positively to each of the

tax reforms; changes in all taxes were affected by the reforms because GDP was also growing;

economic growth has positive significant effect on all the categories of taxes; Government

effectiveness has positive impact on indirect taxes; and that even though government control of

corruption effect on tax revenues is statistically insignificant, it could promote the revenue

generation more than economic growth. These findings have a number of policy implications:

the government should put more emphasis on governance in order to promote revenue collection.

Government effectiveness and control of corruption would go a long way to enhance tax

compliance, reduce tax avoidance and evasion, eliminate illicit flows and reduce illegal

collusion. The study concludes that governance plays more significant role in promotion of tax

revenues than many other determinants.

Hassan et al., [2021] to investigate the impact of governance on tax revenue in Pakistan using

control variables inflation and industrial value-added. The population sample is long- and short-

run

effects of hypothesized variables on the tax revenue using a period 1976–2019. The dependent

variable is tax revenue while the dependent variable is Governance proxied by tax

COLLECTION(InTAXREV),lnINDVAt. The data analysis used is Autoregressive Distributive

Lag (ARDL) cointegration techniques. The result show exposes that government stability, law

and order, and internal and external conflicts leave a positive and significant impact on tax
revenue in the long and short run. Hence, it is concluded that governance is an essential source in

expanding tax revenue in Pakistan. Moreover, industrial value-added and inflation also show

positive effects on the tax revenue. On the grounds of these results, it is proposed that the

government should make serious efforts to improve governance and industrial activities for

better tax revenue collection

Krajnak[2019] evaluate the dependence of tax revenue on the personal income tax based upon a

dependent activity related to tax relief for the taxpayer, namely the tax credit for children.

Another objective is to analyze the dependence on the valorization of the tax reliefs and tax

credit claims. The population sample is that the database of the Czech Statistical Office and the

Ministry of Finance of the Czech Republic is used as a source of input data for the analysis. The

dependent variable is the personal income tax proxied by the amount of recalculated tax revenue

while the independent variable is tax revenue proxied by recalculated tax relief on the taxpayer

or the tax credit for the first, second or third child, X2 is the rate of registered unemployment, X3

is the pace of economic growth and ε is the random component of the model. The results of the

analysis show that the tax credit for children has a positive effect on tax revenue. The amount of

the tax advantage for children has almost doubled in the last 11 years. On the other hand, general

tax relief for all taxpayers has not been valorized since 2008. The existence of a certain non-

taxable minimum is typical for personal income tax systems around the world tax, and the

valorization in the Czech Republic did not show a negative impact on the tax system’s

competitiveness. Increasing the amount of deductions might be non-effective from the

perspective of the state, but the results of this study show that the effect.
Basheera et al., [2018] examines the impact of economic and financial factors on tax revenue of

Bahrain. The population sample is affected by both economic and financial factors of the

countries from 1990 to 2010. For this purpose, the data analysis uses panel regression analysis is

performed by considering economic and financial factors including growth domestic product

(GDP), Deposit Interest Rate, Lending Interest Rate, Interest Rate Spread, Real Interest Rate,

Bank Capital to Asset Ratio, Bank nonperforming loans to total gross loans, Risk premium to

lending, Foreign direct investment net inflow and Cash surplus deficit. A conceptual model is

developed for this purpose and the key findings are explained. The outcomes of the study explain

that there was a significant relationship between Tax revenue and both economic financial

factors i.e. GDP and growth, Bank capital to asset ratio, the Risk premium on lending, Foreign

direct investment net inflow and Cash surplus/deficit over the period of study. The independent

variable are economic and financial factor, with the dependent variable of tax revenue However,

the findings of the study can be more meaningful with the addition of more economic and

financial factors as well. Besides, the consideration of other Asian states will provide more

evidence for the generalization of the findings. Meanwhile, this study will be a policy note on

on-going tax reforms in selected Middle East countries and will be helpful for policymakers and

researchers in conceptualizing the tax revenue model for them. It concluded that, besides some

future recommendations is the implication of present study on all the OECD countries by

expanding the sample size. Thus, we can argue that the economic growth has a significant impact

on tax policy of Oman and Bahrain.

Ofori et al., [2018] estimate the effect of exchange rate volatility on tax revenue. The population

sample set out to test the hypotheses that exchange rate volatility has both short-run and long run

impact on tax revenue generation in Ghana using annual data spanning 1984 to 2014. The

dependent variable is Tax revenue proxied with gross domestic product while the independent

variable is Exchange rate volatility. The study employed the Auto Regressive Distributed Lag

(ARDL) technique after the yearly exchange rate volatilities had been generated using the

GARCH(1,1) method. The results of the study suggest that exchange rate volatility has a

deleterious effect on tax revenue both in the short-run and long-run but the effect is more

pronounced in the long-run than the short-run. The study The study recommends that the Bank of

Ghana step-up its exchange rate stabilization efforts to reduce exchange rate risk imposed on

international trade players. The gap is that there is need for the Ghanaian government to generate

enough revenue for development is becoming increasingly crucial in this era of slow growth,

growing unemployment and high debt. However, tax revenue performance over the years reveals

an unstable pattern.

Nguyen et al., focuses on the correlation between tax revenue, investment, and economic

growth, taking into account the non-linear effects of tax revenue. the population sample uses

Macro data of nine countries in ASEAN (including Brunei, Cambodia, Indonesia, Laos,

Malaysia, Philippines, Singapore, Thailand, and Vietnam) in 2000 - 2020 were extracted from

the World Bank database. The data analysis to estimate panel data according to cross-regressions

for each respective time unit. These estimates

represent simple pooled OLS estimation models. This estimate does not take into account effects

per unit and overtime and ultimately distorts the true picture of the relationship of the variables
studied across cases and over time. Therefore, Gujarati et al. (2017] show that a better estimator

for panel data is an estimator that considers time and cases simultaneously to provide more

information, more degrees of freedom, and is more efficient by combining the time series and

cross observations. Fixed-effects estimation (FEM] and random-effects estimation

(REM)represent this method with many advantages over the previous simple pooled OLS

estimation. The independent variable are tax revenue and investment proxied as the factor of

total productivity, 𝐿𝑡𝜀represents labor force, và 𝐾𝑡 is the capital, 𝜀 và, while the dependent

variable is Economic growth proxied with yt as gross domestic product. The findings show that

the study found statistical evidence of a negative effect of tax revenue on economic growth.

However, when considering the non-linear effects of tax revenue, the empirical findings showed

that higher tax revenue could reduce the disadvantages of tax impacts to boost economic growth.

The negative effect of taxes is as obvious as the economic growth theories, but it depends on the

taxation revenue. Lower tax revenue may encourage saving and investment, but it also leads to

an increased government debt, spending and investment. Moreover, this study provides

consistent evidence of investment’s positive effect on economic growth in ASEAN countries

during the research period. It then concluded that the severe impact of the COVID-19 pandemic

has increased macroeconomic uncertainties, including uncertainty over savings, investment, and

spending, potentially leading to tax revenue and investment losses. It, in turn, affects economic

activities, so it requires careful consideration. Learned lessons from this study can prepare for

future economic shocks and financial crises to reduce negative impacts on economic growth,

including their adverse tax revenue effects.

 Ashiedu, et al., [2022] determined the effect of Tax Revenue on National Development of

Nigeria. The population sample is In line with the objectives of the study, three hypotheses were

formulated. Ex-Post facto research design was employed. Secondary data were obtained from the

publications of Federal Inland Revenue Service (FIRS) bulletin, Central Bank of Nigeria (CBN),

National Bureau of Statistics (NBS) and the World Bank statistical bulletins and were analyzed

using E-Views 10.0 statistical software in Nigeria from 1999-2020. The study employed

inferential statistics using Pearson correlation, Augmented Dickey Fuller (ADF) test, Ordinary

Least Square regression analysis, Granger Causality test, Johansen Co-integration test and Error

Correction Model. The dependent variable is National Development was measured by Per

Capita Income. While the independent variable is Personal Income Tax, Company Income Tax

and Value Added Tax were used to proxy Tax Revenue. The findings from the empirical analysis

showed that there is a significant negative relationship between Personal Income Tax, Company

Income Tax, Value Added Tax and Per Capita Income at 5% level of significance. It was

recommended inter alia that there should be continuous orientation and enlightenment

programmers for company income taxpayers and tax officials. Governmentshould be prudent and

transparent in spending taxes collected so as to gain taxpayers confidence.

Oladipo, et al., [2019] examined the impact of total tax revenue on agricultural performance in

Nigeria. The population sample uses Engel and Granger approach to cointegration to establish

the long- and short run behavior. The data analysis is stochastic properties of the time series are

tested using the Augmented Dickey-Fuller (ADF) approach. Estimate non-stationary series with

ordinary least square may result in spurious regression. The ADF, on the other hand, has been

popular in the literature to investigate stationarity in time series. After the ADF test and if the
outcome shows that all series are integrated of the same order, that is order 1. England Granger

give a suitable one equation, which can be used to investigate the long-run behavior and short-

run dynamics. The dependent variable is AGDP proxied on agricultural performance. while the

independent variable is tax revenue proxied on proxy by agriculture contribution to GDP, Capital

(CAGR) is proxy by loan credit given to agriculture sector, Agriculture employment (EAGR) is

proxy by employment in agricultural sector, Revenue from\agriculture (TAGR) is proxy by total

income in agricultural sector and Amount of Tax (TAX) is proxy by total tax generated. The

implication of the result showed that tax has not yielded desirable result in promoting the

agricultural sector in Nigeria. To promote pro-poor growth, long-run employment and improve

overall welfare, there is a need to incorporate benefit from tax into agricultural performance. The

study recommends among others the need for a systemic approach, given a significant

percentage of the total tax generated to boost the development of the agricultural sector.

Jansky et al., [2019] focused on quantifying the scale of profit shifting by MNEs and the

resulting corporate tax revenue losses, using FDI data. The sample approach uses the leading

data sources with country-level information on FDI. We use bilateral data on FDI stocks from

the IMF’s Coordinated Direct Investment Survey (CDIS), which contains data for up to 112

countries between 2009 and 2016 (IMF 2018). In data analysis First, we present estimates of

the baseline model using updated data sources. Second, we estimate the newly developed

extended model and present its estimate of profit shifting and the resulting tax revenue losses.

Third, we compare our results with four other similar studies and highlight their relevance for the

cross-country distributional impact of international corporate profit shifting. where the dependent

variable FDI_RORit is the rate of return on FDI while the independent variable share is the share
of FDI from tax havens in country i in year t, zs,i are year fixed effects, and dk are regional fixed

effects based on the World Bank’s classifications. The result begins with the results of the

estimation of the baseline model. For both the rate of return and its equity component, we fond a

statistically significant negative relationship between the share of inward FDI originating from

tax havens and the rate of return on FDI.

Neog et al., [2020] examines the long-run and short-run relationship between tax structure and

state-level growth performance. The population sample uses long-run and short-run relationship

in India for the period 1991–2016. The analysis in this paper based on the model of Acosta-

Ormaehea and Yoo (2012), and for the verification of the relationship between taxation and

economic growth\he panel regression method is used. With the use of 14 Indian states data,

Panel Pool mean group estimation indicates that income tax and commodity–service tax have

negative effects whilst property and capital transaction tax have a significant positive effect on

state economic growth each tax instrument in the models separately to avoid the problem of

multicollinearity. The dependent variable Yit is the growth rate of Per capita net state domestic

product (NSDP) while the independent variable is Tax structure proxied on gross investment as a

percentage of state domestic product, TAX is one of the tax shares (Property, Commodity &

Services and Income), Tax Burden2 is the ratio of total tax revenues to state domestic product.

the result found’s ‘U’ shape relationship between tax faster structure and growth performance.

Based on the analysis. we conclude that for growth of Indian states, policymakers should give

more focus on property taxes along with the reduction in income taxes.
Adefolake et al., [2022] assesses the effects of tax revenue on the economic growth of Nigeria.

The population sample employs secondary form of data which have been sourced from CBN

statistical bulletin and published Federal Inland Revenue Statement utilizing time series data

spanning from

year 2000 till 2021. The data analysis used were Ex-post facto research design is used for this

study. The data collected are analyzed and tested for unit root using Augmented Dickey Fuller

method. The study variables which difference comprise GDP, PPT, CIT& VAT are found to be

stationary at first. Thus, a Johansen.co-integration test is also conducted and it reveals a long-run

relationship. Consequently, the study utilizes the Vector Error Correction Model to evaluate the

effects of PPT, CIT and VAT on GDP. The findings reveal that PPT and VAT have positive and

significant effects on GDP. It also reveals that CIT has a negative and significant effect on GDP

Based on these findings, the inquiry suggests that trainings and workshops should be organized

by government tax agencies to the Nigerian public and companies on the importance and benefits

of tax revenue to the economy. The tax authorities should also endeavor to encourage companies

to pay tax so as to improve the growth of the economy which the companies are meant to benefit

from as part of government’s fulfilment of its social responsibilities. the study concluded that the

relevance of tax revenue to an improved Nigerian economy cannot be over emphasized.

Therefore, tax revenue is an avenue for the government to source for funds to use and improve

the workings of the economy and this would lead to economic growth.

Maganya[2020] investigates the effect of taxation on economic growth in Tanzania. The

population sample used was the recently developed technique of autoregressive distributed lag

model (ARDL) bounds testing procedure for the period from 1996 to 2019. The econometric

literature makes clear that the estimates of ordinary least squares (OLS) are biased in nature and
that they are inconsistent especially when using time series data. The reason is that the OLS

estimates are affected by the presence of endogeneity, for that reason, they are unable to promise

stable and robust forecasting (Messaoud & Teheni, 2014). This study applies autoregressive

distribution lags (ARDL) approach to deal with the short comings. The dependent variable is

economic growth proxied on Domestic goods and services. The independent variable is Taxation

proxied on income tax, taxes on domestic goods and services, FDI, domestic investment (DI),

inflation and real GDP) are being. According to the results obtained, domestic goods and

services (TGS) taxes are positively related to GDP growth and are statistically significant at 1%

level. Income taxes, on the other hand, were found to be negatively related to GDP growth and to

be statistically significant at 5% level. The pair-wise Granger causality results indicated that

there is bidirectional Granger causality between TGS and GDP growth at 1 % significance level.

The government should aim at growing, nurturing and sustaining tax base to positively drive

economic growth even further.

Egbunike, et al., [2018] examine the effect of tax revenue on economic growth of Nigeria and

Ghana. The population sample used is aimed to determine the relationship between Tax Revenue

and GDP in Nigeria and Ghana and comprises the period 2000–2016. The study used multiple

regressions as tools of analysis. The data for the analysis is retrieved from the Central Bank of

Nigeria Statistical Bulletin and Bank of Ghana Statistical Bulletin. The duration of the study was

17 years; which gave rise to a time series data. The independent variable is Gross tax revenue

while the dependent variable is Economic growth. The study finds a positive impact of tax

revenue on the gross domestic product of Nigeria and Ghana confirming prior studies. The study

recommended among others that adequate measure to ensure that revenue generated from the tax

is effectively utilized to develop and grow the economy.

Ha, et al., [2022] identifies the determinants of tax revenue in Southeast Asia based on a

balanced dataset of eight countries. The sample consists of eight countries in Southeast Asia

(Indonesia,

Cambodia, Laos, Myanmar, Malaysia, the Philippines, Thailand, and Vietnam). Tax revenue data

on Brunei Darussalam is not available, so we exclude this country from the sample. There is also

a shortage of data on Singapore, which is a developed country and has higher income per capita

than the other countries in Southeast Asia. To ensure that our sample is homogeneous in terms of

geographic location and level of development, we also exclude Singapore from the sample. The

research data mainly come from the World Bank’s WDI in 2017 and Freedom in the World 2017

(Freedom House, 2017). Information about variables in the model can be found in T The sample

consists of eight countries in Southeast Asia (Indonesia, Cambodia, Laos, Myanmar, Malaysia,

the Philippines, Thailand, and Vietnam). Tax revenue data on Brunei Darussalam is not

available, so we exclude this country from the sample. There is also a shortage of data on

Singapore, which is a developed country and has higher income per capita than the other

countries in Southeast Asia. To ensure that our sample is homogeneous in terms of geographic

location and level of development, we also exclude Singapore from the sample. The research

data mainly come from the World Bank’s WDI in 2017 and Freedom in the World 2017

(Freedom House, 2017). Information about variables in the model can be found .t Southeast

Asian countries from 2000 to 2016 using static panel (Driscoll-Kraay) and dynamic panel

(system-GMM) regressions By employing static (pooled Ordinary Least Squares (OLS), fixed

effects (FE) model, random effects (RE) model and DriscollKraay standard error) as well as

dynamic panel data (system–generalized method of moments) regression techniques, we show

that the .openness of the economy, foreign direct investment (FDI), the ratio of foreign debt to

the gross domestic product (GDP),the share of value added in industry to GDP have positive

impacts on tax revenue, and official development assistance has a negative impact. The

independent variable is FDI, GDPPC, ARG, POLRIG. While the dependent variable is Tax

revenue. The results show that the openness of the economy, foreign direct investment, the ratio

of foreign debt to GDP, the share of value added in industry to GDP have positive impacts on tax

revenue, whereas ODA has a negative impact Countries should concentrate on trade openness

policies because favorable trade positively affects trade flows. They not only help countries

collect taxes through import and export activities but also contribute to economic growth and

infrastructure development, thereby indirectly increasing tax revenue. Second, with respect to

FDI, governments should pay more attention to policies for attracting investment, rather than

offering tax incentives for foreign businesses and to transfer pricing activities that drive

enterprises to evade taxes. Third, Southeast Asian countries should accelerate economic

restructuring to achieve industrialization and modernization and to increase the contribution

share of industry in GDP. Fourth, the role of foreign debt in economic growth—such as

supplementing the shortage of capital in development, contributing to technology transfer,

enhancing management capacity through the imports of modern machinery, advanced

technology, and accessing the transfer of management skills of foreign experts—is undeniable;

therefore, it increases production capacity in the economy. However, the higher the ratio of

external public debt to GDP is, the greater the debt repayment pressure faced by governments;

therefore, governments need to increase revenue to repay these debts. Therefore, they need to

complete policy institutions and debt management tools and to improve their efficiency in

mobilizing and using loans. Last but not least, although foreign aid negatively affects tax
collection, governments need to reduce the tax collection burden in investment activities.

However, it is the cause of weak responsibility in public spending, the possibility of

government’s reckless public spending; thus, as with foreign debt, governments need to improve

their foreign aid management policies, allocate and use investment funds appropriately, and

frequently monitor the implementation process in investment projects.

Afori, et al., [2021] examine the effort to enhance tax revenue mobilization in Africa: Exploring

synergies between industrialization and ICTs. To this end, we use\data on 42 African countries

for the period 1996 – 2020 for the analysis. The data analysis used is justifications for applying

the two-

step system GMM9 technique is seen in (Asongu et al cited by Afori et al., [2021]; Tchamyou

2019). First, the sample countries (i.e., N) used in the study is greater than the number of time

period in each cross-section (i.e., T). Thus, with N>T, it guarantees that the application of the

technique is satisfied. Second, the two outcome variables are persistent since the correlations that

exist between their current levels and their first lags are above 0.8, which conforms to the rule

thumb for satisfying persistence in a variable (Asongu and Odhiambo 2020b; Tchamyou and

Asongu, 2017). And third, the panel dataset also reveals cross-country variation which is

accounted for in the estimation. Consequently, we transform Equation (1) into Equations (2) and

(3) to capture the level and first difference, which encapsulate the dynamic system estimation

method. The dependent variable is: Goods and service tax, while the independent variable is

Foreign direct investment effectiveness. This section presents the findings on the conditional and

unconditional effects of industrialization and ICTs on GST. Following the extant empirical

literature that is based on the GMM approach (Asongu and De Moor 2017), the study adopts
three post-diagnostic information criteria to investigate the validity of the models used for

estimation. Considering these established information criteria, all the specifications are valid.

Especially, this research pays critical attention to the validity of several diagnostic tests. First, the

absence of second-order serial autocorrelation in the residual, which is evidenced in the (AR [1])

and (AR [2]) statistics whose null hypothesis for no autocorrelation should not be rejected.

Second, is the test for over-identification restriction and validity of the instruments, which is

addressed by the Hansen test since all the p-values are insignificant. Finally, issues about the

number of instruments that can compromise the validity of the model has been 15addressed (i.e.,

instrument proliferation) since the number of instruments for each ICT skills report 0.01%,

and0.0and 3%, respectively. The results unveil that, compared to other components of ICT

diffusion, CT usage is the most relevant in inducing GST mobilization in SSA. This appeals to

logic as well, since ICT usage is required to make sense of both ICT skills and ICT access.

Third, considering the second hypothesis, we investigate the conditional effect of enhancing

industrialization. We recommend that development partners such as the African Development

Bank and the World Bank do not only channel resources to boost the continent’s ICT skills,

access, usage and digital tax filling lags in ICT adoption are most glaring. However, as ICT

penetration intensifies, policymakers should equally be aware of which policy measures are

required to maintain the positive synergy from the interaction between industrialization and ICT

dynamics on tax revenue mobilization. Enhancing governance and financial development which

can constitute some relevant complementary policy measures should be considered in future

research, not least, because these propositions should withstand empirical scrutiny before being

prescribed to policymakers.
 Ndubuisi [2018] firstly, theoretically unveiled militating factors bedeviling and denying

Nigerian government revenue from the taxation. Some of these factors are free rider problem, the

vicious circle of negligence, the monster called corruption, terrorists and militancy, rich tax

dodgers, ‘oso’ tax and others. Secondly, data were collected through the secondary source for the

period of 12yrs (2004-2015). The regression analysis results indicate an overall statistically

significant relationship between tax income and total revenue. Ordinary Least Squares (OLS)

regression technique was employed to empirically investigate the relationship between Total

Revenue (TR) and various tax variables. In line with Okafor, (2012) methodology, EViews

statistical package was used to obviate possible problems associated with regression analysis of

timeseries data. The further method adopted that is similar to what Engen and Skinner. 1996)

suggested avoiding bias one can introduce explanatory variables the percentage growth rate in

the level of taxation. This help to examine the tax collection efforts of various agencies saddled

with such responsibilities. The model specifications for the three tiers of government. the

dependent variable is tax revenue. While the independent variable is Petroleum profit tax proxied

on company income tax, value added tax, custom exercise duties, education tax. The result

shows the tax collection mechanisms should be strengthened through adequate training of

personnel in charge. Secondly, the business

environment should be made conducive for investment to thrive. Thirdly the present fight against

corruption should be continued, and the government has to demonstrate her readiness to utilize

the available resource. efficiently. Fourthly, we recommend other states of the federation to

emulate Ogun State and Lagos State by widening their tax net. Finally, the call for diversification

of the economy is one that government should quickly address. The conclusion overcome the
present fall in revenue generation, we recommended certain actions to be taken to improve the

system for a better result.

Amah, et al., [2018] examined empirically, the effect of tax audit practice on down south tax

revenue generation in Nigeria. The population sample examine tax audit is the explanatory

(predictor) variable operationalized as desk tax audit, while the measures of tax revenue

(criterion) variable are

Personal Income Tax (PIT) collected during the period of 2000 to 2015 The data analysis

examined empirically, the effect of tax audit practice on down south tax revenue generation in

Nigeria. Both primary and secondary source of data was adopted and the data collected was

analyzed using linear regression analysis and multiple regression analysis with the aid of special

package for social sciences (SPSS) verses predictor variable of tax audit ion 21.0 with 0.71%, the

empirical results indicate that the practice has positive effect on criteria variable of tax revenue

in Nigeria. The dependent variable is down South tax revenue generation proxied on personal

income tax. while the independent variable is Tax audit practice proxied on desktop. the study

expressly makes the following recommendations that cost and cost analysis between the value of

tax verification and tax receipt tax that are expanded to be conducted before the tax authorizes.

This is to ensure that the collection of taxes has been higher than the costs improving compliance

EHIEDU et al., [2022] investigated the effect of revenues leakages on economic development in

Nigeria. The secondary used in this study, were sourced from Budget Analysis Report, Central

Bank of Nigeria (CBN), Federal Inland Revenue Service (FIRS), World Bank Statistical Bulletin

and National Bureau of Statistics (NBS) for the period 2000-2020. The data set was defined
using descriptive statistics, and the unit root test was used to determine if the data were

stationary. The correlation analysis will be used to determine the independent variables' co-

movement in connection to the dependent variable, while the Multiple Regression analysis was

used to assess the research hypotheses raised using E-VIEW version 9.0. The findings found that

Tax Evasion and Avoidance of Oil Revenue (TEAOR) has negative insignificant effect on

Human Development Index (HDI)while Tax Evasion and Avoidance of Tax Revenue (TEATR)

and Tax Evasion and Avoidance of Total Revenue (TEATTR) has negative significant effect on

Human Development Index. (HDI) in Nigeria. The dependent variable is Economic growth

proxied on HDI = Human Development Index. While the independent variable is Revenue

leakage: proxied on β1=Coefficient of Tax Evasion and Avoidance of Oil Revenue, TEAOR =

Tax Evasion and Avoidance of Oil Revenue, β2 = Coefficient of Tax Evasion and Avoidance of

Tax Revenue, TEATR = Tax Evasion. Avoidance and of Tax Revenue, β3 = Coefficient of Tax

Evasion and Avoidance of Total Revenue, TEATTR= Tax Evasion and Avoidance of Total

Revenue. As a result, the study revealed that there is a mixed link between revenues leakages and

economic development in Nigeria. The paper suggests that, in order to reverse the negative

effects of tax leakages on economic development, the government should provide employment

opportunities to all through the wise use of tax proceeds, thereby encouraging a high rate of tax

compliance and reducing the twin problems of tax evasion and avoidance to a tolerable level. Its

paper recommends that in order to reverse the negative effects of tax leakages on economic

development, government should provide employment opportunities to all by the judicious use

of tax proceeds, which will promote high rate of tax compliance, thereby reducing to a tolerable

limit, the twin problems of tax evasion and avoidance.

Hakim [2020] investigates the effects and consequences of both direct and indirect taxes on

economic growth and total tax revenue the datasets were collected from World Development

Indicators (WDI), World Bank. In order to avoid the problem of too many instruments

mentioned by Rodman (2009), the

period of time was averaged into five-year intervals which consists of 1992 – 1996, 1997 – 2001,

2002 – 2006. 2007 – 2011and 2012 – 2016 (Law et al., 2017). Besides, the GMM estimator

required a large sample (n) with a small number of time period (t) where this study includes 51

countries with five-year intervals. The data analysis used is panel data. The dependent variable is

the growth rate of GDP and total tax revenue/GDP. The independent variable is the growth rate

of GDP and total tax revenue/GDP. The findings suggest that direct taxes have a negative and

significant effect on economic growth, while indirect taxes show positive but insignificant

relationship with economic growth. Additionally, this study found a mixed result regarding the

significant contribution of both direct and indirect taxes on the collection of tax revenue in a

country. The conclusion is that tax structure based on direct taxes such as taxes on income, profit

and capital gains are harmful to the economic growth, yet more efficient in terms of collecting

the tax revenue in a country.

2.5 Gaps in the Literature

Based on empirical analysis of tax revenue, the Nigerian economy showed notable regional
differences. There are still some notable differences even among the research done in Nigeria.
Some of these studies did not use reliable procedure to analyze the study data.
Additionally, the majority of the research was carried out in developed economies outside of
Nigeria, such as Europe. The assessment of relevant literature reveals that the use of single
double independent variables as measures in connection of the Nigeria inclusive growth
presented methodological challenges for the majority of the research, which this study now seeks
to address. Similar to this emphasizes on the health expenditure, relatively few studies have
looked at the link between tax revenue and inclusive growth.

CHAPTER THREE

METHODOLOGY

The chapter focuses on the methodological framework adopted to investigate the effect of tax

revenue on inclusive growth in Nigeria. To accomplish this experiment array of integrated

subsections are required. These include research design in section 3.1, population of the study

and sample size in sections 3.2 and 3.3 respectively. Section 3.4 present source of data, Section

3.5 presents methods of data analysis while in section 3.6 discuss model specification, which is

accomplished by measurement of variables in section 3.7. section 3.8 stress on the estimation

techniques while section 3.9 examines the Apiori expectations of the independent variables.

3.1 Research Design

Expo factor research design was used to guide the research procedure and data collection. The

study adopts expo facto because the data needed for this study is secondary data which was

collected from secondary sources.

3.2 Population of the Study

The population employed for this study can be traced back to the availability of data on Central

bank (CBN) statistics and World bank data. The population of the study is made up of from

Nigeria history from 1914till date (2023).

3.3 Sampling Method and Size

The sample for the study will be limited to the size of the population which ranges from 1989 to

2021. The sampling is purposive sampling technique, which enables the researcher to choose a

sampling size he prefers.

3.4 Source and Method of Data Collection

The researcher employs secondary data for this study, because the variables under investigation

are quantitative in nature. These variables are Tax revenue, health, education, and HDI (human

development index). The data on these variables are collected on annual basis from the CBN

statistical bulletin, world bank and Federal inland revenue service (FIRS) website over the period

1989 to 2021 marking a total observation of 31.

3.5 Method of Data Analysis

3.6 Model Specification

3.7 Measurement of Variables

Independent variables Definition Measurement Apriori Expectation

Value added tax It is an tax on goods Value added tax is Positive

and services. It is a measured as the

consumption base percentage of the

tax, which is tax on total cost, using 7.5%

general consumption as the rate.

expenditure designed

with the sole aim of

raising revenue for

the government.

Company tax It is a type of direct The taxable income is Positive

tax levied on the measured by

income or capital of a deducting the cost of

corporation and other sold goods and

 similar legal entities. expenses from the

The tax is usually total sales. With

imposed at the presumptive taxation,

national level, but it your taxable income

may be imposed at is a fixed percentage

state or local level in of your total sales.

some countries.

Dependent variables Definition Measurement

Health It is a state of complete Health can be measured using

physical, mental, and social pathological and clinical

well-being and not merely the measures and is usually

absence of disease and observed by clinician using

infirmity instruments. It can be

measured as life expectancy at

birth, free of activity

limitation, free of disability

and respondent-assessed

health status in good or better

health.

Education It is the process of receiving Education is measured using

or giving systematic raw scores, percentile rank

instruction. It is an and standard score.

 enlightening experience.

Human development index It is a summary composite Human development index

measure of a country’s measures three important

average achievements in three aspect of the national

basic aspect of human economy which are composite

development; health, statistics of life expectancy,

knowledge and standard of education and per capital

living income.

3.8 Estimation Technique

The three (3) parts of the estimating technique employed in this research are pre-estimate

analysis, estimation, and post-estimation to meet the study's objective.

The prior-estimation technique includes data visualization, the unit root test, and summary

statistics

Many graphical techniques are used when displaying the data to visually explain the connections

between various data sets and to highlight a particular aspect of the data. We'll use summary

statistics to enumerate the features of the data sample. It offers pertinent metrics and justifies the

values. The correlation matrix, which is a table detailing the correlation coefficients between the

variables, offers a framework for interpreting the data gathered throughout the course of the

study. After a dataset overview, data patterns should be identified, recognized, and displayed.

Unit root testing is used to assess if the time series variables are non-stationary and have a unit

root. To stabilize trending data, it is also utilized to select whether to first distinguish the data or

regress it using deterministic time functions. The null hypothesis predicts the presence of a unit
root, but the alternative hypothesis is either stationarity, trend stationarity, or an explosive root,

according to tests using the Augmented Dickey-Fuller (ADF) and Philips-Perron (PP) tests.

Lag structure, coin-integration tests, Granger causality tests, and error correction models are the

main estimation strategies.

Cointegration testing is carried out after choosing the best integration approach for the variables.

Use the cointegration test to determine whether or not variables in a time series are long-term

correlated. Even if the level of economic time series is not steady, a linear combination of these

elements may ultimately converge to a long-term link, as shown by Engle and Granger. If the

linear combination of a variable's levels is stationary, even if the level of the individual variable

is stationary only after differencing, the variable is said to be cointegrated. Cointegration shows a

long-term link between the variables.

There are three methods to check for cointegration. The three methods are the Johansen and

Juselius rank approach, the two-step Engle and Granger procedure, and the ARDL limits testing

methodology. An error correction model is the approach that is most often used to model time

series equations (ECM). The ECM handles non-stationary data series and separates long and

short runs. As a consequence, ECMs can anticipate with high accuracy the time it takes for a

dependent variable to achieve equilibrium after a change in other variables. In a scenario of

Granger causality, a one-time series variable changes predictably and consistently before other

variables. These leading components are highly useful for prediction because Granger causality

makes it possible to identify which variable happens first. When the variables are cointegrated,

the vector error correction model-based Granger causality technique will be used. The vector

error correction model might balance the short-run behavior. Cointegration is seen in the vector

error correction model's restricted vector autoregression model. Engle & Granger (1987) showed
that there must be at least one direction of causality if the variables are co-integrated. Granger

causality, which encompasses both short-run and long-run causation, is derived via the vector

error correction model from the long-run cointegration equation.

Tests for serial correlation, normalcy, multicollinearity, and heteroskedasticity are among the

post-estimation procedures.

In this inquiry, a variety of diagnostic tests, including serial correlation, heteroscedasticity

normalcy, and multicollinearity tests, will be used. Serial correlation in time series variables is

the relationship between a variable and a lagged version of it across a long number of epochs (for

instance, a variable at time T and at time T-1). Even though it is a statistical model used in

multiple linear regression analysis when two or more independent variables are tightly related,

the multicollinearity test is a mathematical tool for identifying recurring patterns. To determine if

the data's distribution is consistent with a normal distribution, a normality test is performed. To

determine if the data are typical of a normal population, the goodness-of-fit test is often used. If

the values of the independent variables have any effect on the variance of the regression errors, it

may be determined using a heteroscedasticity test.

 CHAPTER FOUR

PRESENTATION AND DISCUSSION OF RESULTS

4.0 Introduction

The described model in the previous chapter is base on analysis, for which result are given and

debated in this chapter. The chapter comprises of three major sections, which are; preliminary

analysis, estimation analysis and post-estimation analysis. Under the pre-estimation analysis, the

statistical properties and the trend of the variable employed are mentioned, followed by the

formal test (unit-root) for the determination of the stationary of the series. The second part entails

of the relevant model adopted in the study.

4.1 Descriptive Analysis

4.1.1 Descriptive statistics for Tax Revenue on Inclusive Growth in Nigeria (1989-2021)
Table 4.1: Descriptive Statistics

variables CT HDI EDU HTH PG VAT

Mean 0.013386 0.009085 -0.079258 -0.071632 -0.033997 0.013248

Median -0.033240 0.001025 0.006872 0.014427 -0.003366 0.006771

Maximum 0.566259 0.271646 0.028892 0.032914 0.002023 0.566259

Minimum -0.334915 -0.000608 -2.792805 -2.586857 -1.000000 -0.280404

Std. Dev. 0.233836 0.047916 0.495287 0.459380 0.176301 0.121778

Skewness 0.848536 5.386513 -5.383941 -5.373066 -5.385672 2.540078

Kurtosis 2.884014 30.02084 30.00299 29.92710 30.01498 15.39830

Jarque-Bera 3.858012 1128.245 1126.811 1120.731 1127.775 239.3677

Probability 0.145293 0.000000 0.000000 0.000000 0.000000 0.000000

Sum 0.428348 0.290730 -2.536243 -2.292212 -1.087889 0.423939

Sum Sq. Dev. 1.695065 0.071176 7.604584 6.541933 0.963543 0.459724

Observations 32 32 32 32 32 32

Source: Author” computation (2023)

It is clear shown in Table 4.1 that for the years under consideration in this study (1989-2022), the

average values inclusive growth, proxied by Human Development Index (HDI), Health (HTH)

and Education (EDU) and the Tax Revenues, specifically measured as Corporate Tax(CT) and

Value Added Tax{VAT) with a controlled variables known as Population Growth(PG) are 0.009,

-0.07, -0.03, 0.01, 0.01 and -0.03 respectively. While the mid observations of these variable in

the order of HDI, HTH, EDU, CT, VAT, PG are 0.001, 0.01, 0.006, -0.03 and -0.003

respectively.
Within the period under observation HDI, EDU and HTH peak value were 0.27, 0.02 and 0.03.

0n the other hand, the maximum value for CT AND VAT for the period under review were 0.56

and 0.56 respectively. The maximum value for PG is 0.002. Similarly, the minimum values for

HDI, HTH, EDU CT, VAT and PG are -0.0006, -2.79, -2.58, -0.33, -0.28 and 0.17 respectively.

The table further revealed that HDI, CT and VAT are positive skewed, implying that they have a

long right tail except EDU, HTH and PG with a negative skewed result. This depict that EDU,

HTH and PG have a long-left tail. The kurtosis statistics indicates the peakness or flatness of the

series. The result of the kurtosis revealed that CT is flatikurtic since their kurtosis values is

below the threshold of 3 and also revealed that HDI, EDU, HTH VAT and PG in these variables

are leptokurtic since their kurtosis values were greater than threshold of 3.

However, since the jarque Bera statistics combines Skewness and Kurtosis properties, it provides

more comprehensive information about the distribution property of the series. Following the

Jarque Bera statistics, all the variables except Corporate Tax (CT) indicates normal distribution

as judged by the probability value being greater than 5% significant level. For CT, on the other

hand, the null hypothesis of normal distribution of series is rejected following the value of the

probability being below the significant level threshold.

4.1.3 Unit Root

Following the underlying assumption of linear regression techniques, unit is used to determine

the stationarity of the series to be used for estimation of relevant models. This is done to ensure

that the regression results are not spurious, unstable and misleading and can be used for

meaningful forecast. Non-stationary series are inconsistent and unreliable because they change

unpredictably as time progresses. In lieu of this, the Augmented-Dickey fuller unit root test was

adopted for the purpose of the research study.

SN Variables ADF 5% Probability Integration

 Statistics Critical value order

value

1 HDI - - 0.0000 I (0)

6.904903 2.991878

2 EDU - - 0.0001 I (0)

5.521159 2.960411

3 HTH - - 0.0001 I (0)

5.495280 2.960411

4 CT - 0.0000 I (0)
-15.75068
2.967767

5 VAT - - 0.0006 I (0)

4.750074 2.963972

6 PG - - 0.0001 I (0)

5.580067 2.960411

Source: Author’s Computation (2023)

Table 4.2 present the ADF unit root test results. From the ADF result, all variables are stationary

at levels considering all test options (ADF Statistics, 5% Critical value and probability value.

Human Development Index (HDI), Education (EDU), Health (HTH), Corporate Tax (CT) and

Value added Tax (VAT) are all stationery at difference in their level form because the ADF

Statistics is greater than 5% Critical value removing the minus sign of the ADF Statistics. Also,

checking the probability values of all the variables, it is lesser than 0.05. The last column titled

“I(d)’’ in the above table concludes on the order of integration of the variable. Conclusively, all

variables are integrated of level I (0). Hence, for purpose, ordinary least square (OLS) method

must be adopted for the regression estimation.

Table 4.3: Correlation Matrix Result

CSG VAT PG
 CSG 1 0.465314796 -

2387223 0.077233370

25482867

VAT 0.465314796 1 0.044307955

2387223 02821626

PG - 0.044307955 1

0.077233370 02821626

25482867

Source: Author’s computation (2023)

The table above revealed the relationship impact among the variables adopted for the study.

From the correlation result, it was discovered that a positive impact existed between log of

Corporate Tax (L_CT) and Value Added tax (L_VAT). While there is negative impact between

log of population growth(l_PG) and Corporate tax. This implies that an increase in Corporate

Tax will translate to a decrease in population growth (among others).

Table 4.4 Ordinary Least Square (OLS) Regression Model Result (Model 1)

Dependent Variables =Log of Asset Quantity (L_HDI)

Variables Coefficient Std. Error t-Statistics Prob

L_CT -0.000139 0.000610 -0.171930 0.8647

VAT 0.000264 0.001552 0.169926 0.8663

PG -0.271764 0.000951 -285.6318 0.0000

C -0.000155 0.000168 -0.923631 0.3636

R2 = 99% Durbin Watson=0.40

 Adjusted R2 =99;9% F-Statistics=0.00

Source: Author’s computation (2023)

4.5: Ordinary least square (OLS) Regression model Result (Model II)

Dependent Variable =Log of Education (L_EDU)

Variation Coefficient Std Error t-Statistics Prob

L_CT .004108 0.010316 0.398255 0.6935

VAT -0.008186 0.019768 0.414105 0.6820

PG 2.809270 0.012123 231.7397 0.0000

C 0.016301 0.002143 7.606582 0.0000

R2= 99% Durbin Watson = 0.47%

Adjusted R2= 99.9% F-Statistics= 0.00

Source: Author’s computation (2023)

Table 4.6: Ordinary least square (OLS) Regression Model Result (Model III)

Dependent Variable = Log of Health (L_HTH)

Variables Coefficient Std Error t-Statistics Prob

CT 0.009649 0.020136 0.479194 0.6355

VAT -0.023057 0.038587 0.597536 0.5550

PG 2.604342 0.023663 110.0591 0.0000

C 0.017083 4.083754 0.0003

0.004183

R2 =99% Durbin Watson =0.61

Adjusted R2 =99.7% F-Statistics= 0.000

Source: Author’s computation (2023)

4.3 Hypothesis Testing

Hypothesis testing is used to determine the level of significant of the variables in the study.

However, in line with the OLS regression result in table 4.4, 4.5 and 4.6 above, the hypothesis is

tested at 5% and level of significance using the probability (prob) columns of the table.

L_CT: The pvalue calculated for L_CT in table 4.4 above is 0.8647 which is higher than 5%

(0.05) level of significance; hence the null hypothesis (H0) that there is no significant effect

between corporate tax and human development index is accepted.

L_VAT: the Pvalue calculated for L_VAT in table 4.4 above is 0.8663 which is higher than 5%

(0.05) level of significance: hence the null hypothesis (H0) that there is no significant effect

between Corporate tax and Human development index (HDI)

L_PG: the Pvalue calculated for L_PG in table 4.4 above is 0.0000, it is lower than 5% level of

significance. Hence, the null hypothesis (H0) that there is no significant effect between

population growth and human development index (HDI) at 5% level of significance is rejected.

L_CT: The P value calculated for L_CT in table 4.5 above is 0.6935 which is higher than 5%

(0.05) level of significance: hence the null hypothesis (H0) that there is no significant effect

between corporate tax and education at 5% level of significance is accepted.

L_VAT: The P value calculated for L_VAT in table 4.5 above is 0.6820 which is higher than 5%

level of significance. Hence, the null hypothesis (H0) that there is no Signiant effect between

value added tax and education at 5% level of significance is accepted

L_PG: The P value calculated for L_PG in table 4.5 above is 0.0000 which is lesser than 5%

(0.05) level of significance. Hence, the null hypothesis (H0) that there is no significant effect

between population growth and education at 5% level of significance is rejected.

L_ CT: The P value calculated for L_CT in table 4.6 above is 0,6355 which is greater than 5%

(0.05) level of significance. Hence the null hypothesis (H) that there is no significant effect

between corporate tax and Health at 5% level of significance is accepted

L_VAT: The P value calculated for L_VAT in table 4.6 above is 0.5550 which is greater that 5%

(0.05) level of significance. Hence, the null hypothesis (H) that there is no significant effect

between value added tax and health at 5% level of significance is accepted

L_PG: The P value calculated for L_PG in table 4.6 above is 0.0000 which is lesser than 5%

(0.05) Level of significance. Hence, the null hypothesis (H) that there is no significant effect

between population growth and health at 5% level of significance is rejected. Hence, the three

regression models in the study can be mathematically rewritten as follows:

4.4 Discussion of Findings

Table 4.4, 4.5 and 4.6 above represent the regression estimation analysis for Model I Model II

and Model III respectively. From 4.4, it was discovered that log of Corporate tax (L_CT) has a

negative effect on Log of human development index (L_HDI), log of value added tax (L_VAT)

also has a positive effect on the log of human development index (L_HDI) while log of

population growth {L_PG) has a negative effect on the log of human development index

(L_HDI).

Specifically, corporate tax has a negative effect on the log of human development index of

inclusive growth for the study under review. This implies that a unit increase in corporate tax

tends to reduce the human development index by 0.0001%. This outcome will likely to be a

small decrease in the overall level of human development in the country. The impact of this
decrease will depend on the starting HDI value and magnitude of the tax increase. However,

there is no significant effect between corporate tax and human development index.

On the other hand, one percent increase in log of value added tax result to an average decrease of

0.0002% on the log of human development tax. This means an increase in the value added tax of

the inclusive growth tends to reduce the human development tax. This outcome will decrease

purchasing power particularly those with lower incomes. However, the probability result reveal

that there.is no significant effect between value added tax and human development tax.

Also, one percent increase in log of population growth result to an average increase of 0.27% on

the log of human development index. This means an increase in the population growth revealed

that, of the inclusive growth tends to boast the human development index negatively. This

outcome depends on sever factors including the county’s economic capacity to accommodate a

growing population, the effectiveness of social policies, and investments in education,

healthcare, and infrastructure. However, the probability result reveal that there is significant

effect between population growth and human development index.

Furthermore, the result of the model II in table 4.5 above revealed that, corporate tax has a

positive effect on education for inclusive growth as depicted in the table 4.5 above. 1% increase

in the corporate tax tends to reduce education of inclusive growth by 0.004%. The outcome of

the result reveal that higher corporate taxes may lead to a decrease in the amount of revenue

available to the government for investment in education. The probability outcome reveal

indicates that there is significant effect between corporate tax and education of inclusive growth

in Nigeria for the year under review.

However, value added tax has a negative effect on the education of inclusive growths. For the

study under review. This implies that a unit increase in value added tax tends to increase the
education by 0.68%. The outcome of this relationship is that the increase in VAT has a positive

impact on education. Specifically, for every 1% increase in VAT, education experience a 0.68%

increase. This suggest that there is a positive correlation between VAT and education spending

or investment, indicating that higher rates may be associated with increase funding or support for

education-rating initiatives, programs, or institutions. However, the probability revealed that

there is no significant effect between value added tax and education of inclusive growth.

As well as, population growth has a negative effect on the log of education of inclusive growth

for the study under review. This implies that a unit increase in population growth tends to reduce

the education by 0.00%. The outcome would be no change in education. A reduction of 0.00%

means that there is no actual decrease; education remains unaffected despite the increase

population growth. However, the probability revealed that there is significant effect between

population and education.

In addition to, the result of the model III in table 4.6 above revealed that corporate tax has a

positive on the health for inclusive growth as depicted in the table 4.6 above. 1% increase in the

corporate tax tends to result to decrease the health of inclusive growth by 0.009%. The outcome

of this scenario would be a marginal decrease in the health of inclusive growth. The impact of a

0.009% reduction is relatively small and may not have a significant effect on the overall health

inclusive growth. However, it is essential to consider to consider that this is a simplified model,

and in real-world situations, the impact of changes in corporate tax rates on inclusive growth can

be influenced by various factors and complexities. Economic and policy decision often involve

multiple interrelated variables, and the actual outcome may vary depending on the specific

context and other economic conditions. However, the probability reveals that there is no

significant effect between corporate tax and health on inclusive growth in Nigeria.
Moreover, one percent increase in log of value added tax has a positive effect on the log of

health for the study under review. This implies that a unit increase in value added tax tends to

increase the health by 0.55%. The outcome could imply a positive association between VAT

changes and improved health. However, it’s essential to remember that this statement alone does

not provide enough context or detail to draw definitive conclusions. To fully understand the

implications of this relationship, we need to consider these; magnitude of effect, causation vs

correlation, direction of causality, potential confounding factors, generalizability. However, the

probability reveals that there is no significant effect between value added tax and heath on

inclusive growth in Nigeria.

Along with, population growth, has a positive effect on health for inclusive growth as depicted in

4.6 above. 1% increase in the population growth tend result to increase the health of inclusive

growth by 2.60%. the outcome reveals that the widely embraced approach of promoting

inclusive growth has a positive impact on health, leading to an improvement of 2.60%. This

implies that when economic growth policies are designed are implemented in a way that benefit

a broad section of society, including marginalized or vulnerable groups, it can positively

influence the overall health and well-being of the population. However, the probability revealed

that there is significant effect between value added tax and health on inclusive growth in Nigeria

on the year under review.

Conclusively, all the variables jointly account for as 99.9%, 99.9% and 99.7% for model I,

model II and model III respectively variation in the Human Development Index, Education and

Health as revealed by the value of the adjusted R-squared. The F-statistic, being significant at

5% critical level, proves the overall significance of the model, while Durbin-Watson which

approximately gives a value of 0. indicates that the model is free from serial correlation .
 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 SUMMARY
Nigeria’s tax revenue primarily comes from various sources, including corporate tax (CT) and

value-added tax`(VAT). Corporate tax is levied on the profits of companies operating in Nigeria,

while VAT is a consumption tax charged on the value added to goods and services at each stage

of production and distribution. Inclusive Growth in Nigeria refers to economic development that

benefits all segments of society, reduces poverty, and improves the well-being of the population.

This is often proxied by indicators such as improvement in health, education and the human

development index (HDI). Corruption management, and ineffective tax collection mechanisms

have also been factors that limit the government’s ability to efficiently utilize tax revenue for

inclusive growth initiatives. As a result, Nigeria has faced challenges in adequately funding and

improving its healthcare and educational systems, leading to lower human development

outcomes. To promote inclusive growth and improve the effective use of tax revenue, Nigeria

has been working on reforms in its tax administration, fiscal policies, and efforts to diversify the

economy away from oil dependency. By enhancing tax collection efficiency, reducing

corruption, and making targeted investments in health and education, Nigeria can potentially

improve its human development indicators overall inclusive growth prospects.

This research sought to examine the effect of tax revenue on inclusive growth in Nigeria for the

period of 1989 to 2021. For this purpose, the study measured the dependent variable (inclusive

growth) with health, education and human development index (HDI)’and independent variable

were measured with corporate tax and value added tax. Data for the study were collected from

CBN statistical bulletin and

The regression analysis result of the study revealed that tax revenue proxy with the log of the

corporate tax for model one has a negative and no significant effect on human development

index of inclusive growth in Nigeria, value added tax has a positive and no significant effect on
human development index of inclusive growth in Nigeria and population growth has a negative

effect and a significant effect on human development index. Also, the log of the corporate tax for

model two has a positive and no significant effect on education, value added tax has negative and

no significant effect on education of inclusive growth in Nigeria and population growth has a

positive and significant effect on health of inclusive growth in Nigeria. On the other hand, the

log of corporate tax for model three has a positive and no significant effect on health of inclusive

growth in Nigeria, value added tax has a negative and no significant effect on health of inclusive

growth in Nigeria and population growth has a positive and significant effect on health of

inclusive growth in Nigeria for the period under review.

5.2 Conclusion and findings

The findings of the study disclosed that tax revenue has a significant effect on inclusive growth

in Nigeria. As seen from the study, tax is a common revenue to the government.

A strong correlation might exist between higher levels of public expenditure in areas such as

health and education, which can contribute to improvements in human development indicators.

Nigeria, like many developing countries, faces challenges related to tax evasion, and informal

economic activities, which can affect the amount of tax revenue generated. Conclusively,

effective tax paid to a particular country can boost the economy inclusively and also taxation has

a statistically significant effect on the economy. The outcome of this study is in line with the

conclusion of Okeke, Mbonu, and Amahalu (2018).

5.3 Recommendation

As a result of the above conclusion, this study provides that given the effect of revenue with

respect of tax revenue management on inclusive growth. Below are the recommendations offer:
 i. Expanding the tax base by bringing more individuals and businesses into the tax net

can increase tax revenue without excessively burdening any particular segment of the

population.

ii. Combat tax evasion and avoidance through stricter enforcement, greater transparency,

and the use of technology to track financial transactions more effectively.

iii. Allocating tax revenue to education, healthcare, and social welfare programs can

enhance human capital development and create a more productive and healthier

workforce.

iv. Lastly, continuously monitor the impact of tax revenue policies on inclusive growth

and make adjustments as needed to achieve the desired outcomes effectively.

5.4 Limitation of the study

In the course of working on this study, this current research work is limited to the following:

i. The study is limited by the scope of the work which only covers the activities of

Nigeria

ii. The outcome of the study is based on the identified variables adopted in the study as

well as the available data relating to the dataset

iii. Lastly, the work focuses only on the activities of tax revenue in Nigeria.

5.5 suggestions for further studies

The pursuit of knowledge is infinitive. Thus, this study recommends the following for further

study. These are:

 i. The future researcher should focus more on inclusive growth as well as its variable

that was not included in the current study.

ii. Also, future researchers can compare the inclusive growth of developed economy and

that of a developing nation.

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APPENDICES
 Variables CSG HDI EDU HTH PG VAT

Mean 0.013386 0.009085 -0.079258 -0.071632 -0.033997 0.013248

Median -0.033240 0.001025 0.006872 0.014427 -0.003366 0.006771

Maximum 0.566259 0.271646 0.028892 0.032914 0.002023 0.566259

Minimum -0.334915 -0.000608 -2.792805 -2.586857 -1.000000 -0.280404

Std. Dev. 0.233836 0.047916 0.495287 0.459380 0.176301 0.121778

Skewness 0.848536 5.386513 -5.383941 -5.373066 -5.385672 2.540078

Kurtosis 2.884014 30.02084 30.00299 29.92710 30.01498 15.39830

Jarque-Bera 3.858012 1128.245 1126.811 1120.731 1127.775 239.3677

Probability 0.145293 0.000000 0.000000 0.000000 0.000000 0.000000

Sum 0.428348 0.290730 -2.536243 -2.292212 -1.087889 0.423939

Sum Sq. Dev. 1.695065 0.071176 7.604584 6.541933 0.963543 0.459724

Observations 32 32 32 32 32 32

Null Hypothesis: EDU has a unit root

Exogenous: Constant

Lag Length: 0 (Automatic - based on SIC, maxlag=7)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -5.521159 0.0001

Test critical values: 1% level -3.661661

5% level -2.960411
 10% level -2.619160

*MacKinnon (1996) one-sided p-values.

Augmented Dickey-Fuller Test Equation

Dependent Variable: D(EDU)

Method: Least Squares

Date: 07/12/23 Time: 20:53

Sample (adjusted): 2014Q2 2021Q4

Included observations: 31 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

EDU(-1) -1.024935 0.185638 -5.521159 0.0000

C -0.083854 0.093151 -0.900196 0.3754

R-squared 0.512467 Mean dependent var 0.000000

Adjusted R-squared 0.495656 S.D. dependent var 0.720535

S.E. of regression 0.511704 Akaike info criterion 1.560198

Sum squared resid 7.593376 Schwarz criterion 1.652714

Log likelihood -22.18308 Hannan-Quinn criter. 1.590356

F-statistic 30.48320 Durbin-Watson stat 2.001275

Prob(F-statistic) 0.000006

Null Hypothesis: HDI has a unit root

Exogenous: Constant

Lag Length: 7 (Automatic - based on SIC, maxlag=7)

 t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -6.904903 0.0000

Test critical values: 1% level -3.737853

5% level -2.991878

10% level -2.635542

*MacKinnon (1996) one-sided p-values.

Augmented Dickey-Fuller Test Equation

Dependent Variable: D(HDI)

Method: Least Squares

Date: 07/12/23 Time: 20:54

Sample (adjusted): 2016Q1 2021Q4

Included observations: 24 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

HDI(-1) -144.1973 20.88331 -6.904903 0.0000

D(HDI(-1)) 142.4224 20.78040 6.853685 0.0000

D(HDI(-2)) 141.6478 20.67765 6.850285 0.0000

D(HDI(-3)) 120.6950 23.39600 5.158787 0.0001

D(HDI(-4)) 121.3386 19.15931 6.333140 0.0000

D(HDI(-5)) 113.1773 22.16485 5.106161 0.0001

D(HDI(-6)) 113.0026 22.14765 5.102239 0.0001

D(HDI(-7)) 85.81225 19.62797 4.371938 0.0005

C 0.141635 0.019724 7.180863 0.0000

R-squared 0.896515 Mean dependent var -4.36E-05

Adjusted R-squared 0.841322 S.D. dependent var 0.080105

S.E. of regression 0.031909 Akaike info criterion -3.771833

Sum squared resid 0.015273 Schwarz criterion -3.330063

Log likelihood 54.26199 Hannan-Quinn criter. -3.654631

F-statistic 16.24350 Durbin-Watson stat 1.494826

Prob(F-statistic) 0.000004

Null Hypothesis: HTH has a unit root

Exogenous: Constant

Lag Length: 0 (Automatic - based on SIC, maxlag=7)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -5.495280 0.0001

Test critical values: 1% level -3.661661

5% level -2.960411

10% level -2.619160

*MacKinnon (1996) one-sided p-values.

Augmented Dickey-Fuller Test Equation

Dependent Variable: D(HTH)

Method: Least Squares

Date: 07/12/23 Time: 20:58

Sample (adjusted): 2014Q2 2021Q4

Included observations: 31 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

HTH(-1) -1.020239 0.185657 -5.495280 0.0000

C -0.075439 0.086351 -0.873630 0.3895

R-squared 0.510119 Mean dependent var 0.000000

Adjusted R-squared 0.493227 S.D. dependent var 0.666780

S.E. of regression 0.474667 Akaike info criterion 1.409935

Sum squared resid 6.533959 Schwarz criterion 1.502450

Log likelihood -19.85400 Hannan-Quinn criter. 1.440093

F-statistic 30.19810 Durbin-Watson stat 2.000697

Prob(F-statistic) 0.000006

Null Hypothesis: CSG has a unit root

Exogenous: Constant

Lag Length: 2 (Automatic - based on SIC, maxlag=7)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -15.75068 0.0000

Test critical values: 1% level -3.679322

5% level -2.967767

10% level -2.622989

*MacKinnon (1996) one-sided p-values.

Augmented Dickey-Fuller Test Equation

Dependent Variable: D(CSG)

Method: Least Squares

Date: 07/12/23 Time: 21:00

Sample (adjusted): 2014Q4 2021Q4

Included observations: 29 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

CSG(-1) -3.455676 0.219399 -15.75068 0.0000

D(CSG(-1)) 1.626391 0.149353 10.88961 0.0000

D(CSG(-2)) 0.804335 0.088993 9.038161 0.0000

C 0.030397 0.017709 1.716452 0.0984

R-squared 0.935690 Mean dependent var 0.010391

Adjusted R-squared 0.927973 S.D. dependent var 0.352834

S.E. of regression 0.094693 Akaike info criterion -1.748915

Sum squared resid 0.224168 Schwarz criterion -1.560322

Log likelihood 29.35926 Hannan-Quinn criter. -1.689850

F-statistic 121.2481 Durbin-Watson stat 1.826508

Prob(F-statistic) 0.000000

Null Hypothesis: VAT has a unit root

Exogenous: Constant

Lag Length: 1 (Automatic - based on SIC, maxlag=7)

t-Statistic Prob.*
Augmented Dickey-Fuller test statistic -4.750074 0.0006

Test critical values: 1% level -3.670170

5% level -2.963972

10% level -2.621007

*MacKinnon (1996) one-sided p-values.

Augmented Dickey-Fuller Test Equation

Dependent Variable: D(VAT)

Method: Least Squares

Date: 07/12/23 Time: 21:02

Sample (adjusted): 2014Q3 2021Q4

Included observations: 30 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

VAT(-1) -1.493260 0.314366 -4.750074 0.0001

D(VAT(-1)) 0.101391 0.191136 0.530468 0.6001

C 0.021356 0.022439 0.951739 0.3497

R-squared 0.681726 Mean dependent var 0.002792

Adjusted R-squared 0.658150 S.D. dependent var 0.206918

S.E. of regression 0.120981 Akaike info criterion -1.291733

Sum squared resid 0.395181 Schwarz criterion -1.151613

Log likelihood 22.37599 Hannan-Quinn criter. -1.246907

F-statistic 28.91628 Durbin-Watson stat 2.050925

Prob(F-statistic) 0.000000
Null Hypothesis: PG has a unit root

Exogenous: Constant

Lag Length: 0 (Automatic - based on SIC, maxlag=7)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -5.580067 0.0001

Test critical values: 1% level -3.661661

5% level -2.960411

10% level -2.619160

*MacKinnon (1996) one-sided p-values.

Augmented Dickey-Fuller Test Equation

Dependent Variable: D(PG)

Method: Least Squares

Date: 07/13/23 Time: 10:38

Sample (adjusted): 2014Q2 2021Q4

Included observations: 31 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

PG(-1) -1.035538 0.185578 -5.580067 0.0000

C -0.036340 0.033340 -1.090005 0.2847

R-squared 0.517769 Mean dependent var 0.000000

Adjusted R-squared 0.501140 S.D. dependent var 0.257753

S.E. of regression 0.182051 Akaike info criterion -0.506719

Sum squared resid 0.961134 Schwarz criterion -0.414204

Log likelihood 9.854143 Hannan-Quinn criter. -0.476561

F-statistic 31.13715 Durbin-Watson stat 2.002556

Prob(F-statistic) 0.000005

Null Hypothesis: PG has a unit root

Exogenous: Constant

Lag Length: 0 (Automatic - based on SIC, maxlag=7)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -5.580067 0.0001

Test critical values: 1% level -3.661661

5% level -2.960411

10% level -2.619160

*MacKinnon (1996) one-sided p-values.

Augmented Dickey-Fuller Test Equation

Dependent Variable: D(PG)

Method: Least Squares

Date: 07/13/23 Time: 10:38

Sample (adjusted): 2014Q2 2021Q4

Included observations: 31 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

PG(-1) -1.035538 0.185578 -5.580067 0.0000

C -0.036340 0.033340 -1.090005 0.2847

R-squared 0.517769 Mean dependent var 0.000000

Adjusted R-squared 0.501140 S.D. dependent var 0.257753

S.E. of regression 0.182051 Akaike info criterion -0.506719

Sum squared resid 0.961134 Schwarz criterion -0.414204

Log likelihood 9.854143 Hannan-Quinn criter. -0.476561

F-statistic 31.13715 Durbin-Watson stat 2.002556

Prob(F-statistic) 0.000005

CSG VAT PG

CSG 1 0.465314796 -

2387223 0.077233370

25482867

VAT 0.465314796 1 0.044307955

2387223 02821626

PG - 0.044307955 1

0.077233370 02821626

25482867

Dependent Variable: EDU

Method: Least Squares

Date: 07/14/23 Time: 07:59

Sample: 2014Q1 2021Q4

Included observations: 32

Variable Coefficient Std. Error t-Statistic Prob.

CSG 0.004108 0.010316 0.398255 0.6935

VAT -0.008186 0.019768 -0.414105 0.6820

PG 2.809270 0.012123 231.7397 0.0000

 C 0.016301 0.002143 7.606582 0.0000

R-squared 0.999486 Mean dependent var -0.079258

Adjusted R-squared 0.999431 S.D. dependent var 0.495287

S.E. of regression 0.011815 Akaike info criterion -5.922458

Sum squared resid 0.003909 Schwarz criterion -5.739241

Log likelihood 98.75933 Hannan-Quinn criter. -5.861727

F-statistic 18150.05 Durbin-Watson stat 0.479687

Prob(F-statistic) 0.000000

HISTOGRAM NOMALITY TEST

SERIAL CORRELATION TEST

Breusch-Godfrey Serial Correlation LM Test:

F-statistic 15.27198 Prob. F(2,26) 0.0000

Obs*R-squared 17.28578 Prob. Chi-Square(2) 0.0002

Test Equation:

Dependent Variable: RESID

Method: Least Squares

Date: 07/12/23 Time: 21:06

Sample: 2014Q1 2021Q4

Included observations: 32

Presample missing value lagged residuals set to zero.

Variable Coefficient Std. Error t-Statistic Prob.

CSG 0.003712 0.007737 0.479792 0.6354

VAT -0.002629 0.014160 -0.185679 0.8541

PG -0.008571 0.008742 -0.980494 0.3359

C -0.000711 0.001524 -0.466440 0.6448

RESID(-1) 0.759361 0.201901 3.761054 0.0009

RESID(-2) 0.027526 0.212846 0.129322 0.8981

R-squared 0.540181 Mean dependent var 3.34E-17

Adjusted R-squared 0.451754 S.D. dependent var 0.011229

S.E. of regression 0.008314 Akaike info criterion -6.574380

Sum squared resid 0.001797 Schwarz criterion -6.299554

Log likelihood 111.1901 Hannan-Quinn criter. -6.483283

F-statistic 6.108791 Durbin-Watson stat 1.736884

Prob(F-statistic) 0.000722

HETEROSHKEDASITY TEST

Heteroskedasticity Test: Breusch-Pagan-Godfrey

F-statistic 0.132051 Prob. F(3,28) 0.9402

Obs*R-squared 0.446430 Prob. Chi-Square(3) 0.9305

Scaled explained SS 0.393659 Prob. Chi-Square(3) 0.9415

Test Equation:

Dependent Variable: RESID^2

Method: Least Squares

Date: 07/12/23 Time: 21:08

Sample: 2014Q1 2021Q4

Included observations: 32

Variable Coefficient Std. Error t-Statistic Prob.

C 0.000126 3.57E-05 3.542897 0.0014

CSG 2.17E-05 0.000172 0.126207 0.9005

VAT -2.34E-05 0.000329 -0.071127 0.9438

PG 0.000127 0.000202 0.626644 0.5360

R-squared 0.013951 Mean dependent var 0.000122

Adjusted R-squared -0.091697 S.D. dependent var 0.000188

S.E. of regression 0.000197 Akaike info criterion -14.11243

Sum squared resid 1.08E-06 Schwarz criterion -13.92921

Log likelihood 229.7989 Hannan-Quinn criter. -14.05170

F-statistic 0.132051 Durbin-Watson stat 0.589567

Prob(F-statistic) 0.940183

68

Dependent Variable: HDI

Method: Least Squares

Date: 07/12/23 Time: 21:13

Sample: 2014Q1 2021Q4

Included observations: 32

Variable Coefficient Std. Error t-Statistic Prob.

CSG -0.000139 0.000810 -0.171930 0.8647

VAT 0.000264 0.001552 0.169926 0.8663

PG -0.271764 0.000951 -285.6318 0.0000

C -0.000155 0.000168 -0.923631 0.3636

R-squared 0.999662 Mean dependent var 0.009085

Adjusted R-squared 0.999625 S.D. dependent var 0.047916

S.E. of regression 0.000927 Akaike info criterion -11.01213

Sum squared resid 2.41E-05 Schwarz criterion -10.82891

Log likelihood 180.1940 Hannan-Quinn criter. -10.95140

F-statistic 27581.95 Durbin-Watson stat 0.400031

Prob(F-statistic) 0.000000

Breusch-Godfrey Serial Correlation LM Test:

F-statistic 33.48198 Prob. F(2,26) 0.0000

Obs*R-squared 23.05030 Prob. Chi-Square(2) 0.0000

Test Equation:

Dependent Variable: RESID

Method: Least Squares

Date: 07/12/23 Time: 21:16

Sample: 2014Q1 2021Q4

Included observations: 32

Presample missing value lagged residuals set to zero.

Variable Coefficient Std. Error t-Statistic Prob.

CSG -0.000468 0.000448 -1.043433 0.3064

 VAT 0.002024 0.000890 2.273980 0.0315

PG -0.000867 0.000534 -1.623737 0.1165

C -4.70E-05 9.25E-05 -0.508151 0.6156

RESID(-1) 1.024717 0.179024 5.723912 0.0000

RESID(-2) -0.166766 0.174293 -0.956815 0.3475

R-squared 0.720322 Mean dependent var -2.13E-18

Adjusted R-squared 0.666537 S.D. dependent var 0.000881

S.E. of regression 0.000509 Akaike info criterion -12.16124

Sum squared resid 6.73E-06 Schwarz criterion -11.88642

Log likelihood 200.5799 Hannan-Quinn criter. -12.07015

F-statistic 13.39279 Durbin-Watson stat 2.000662

Prob(F-statistic) 0.000002

Heteroskedasticity Test: Breusch-Pagan-Godfrey

F-statistic 0.210306 Prob. F(3,28) 0.8884

Obs*R-squared 0.705160 Prob. Chi-Square(3) 0.8720

Scaled explained SS 0.470333 Prob. Chi-Square(3) 0.9254

Test Equation:

Dependent Variable: RESID^2

Method: Least Squares

Date: 07/12/23 Time: 21:18

Sample: 2014Q1 2021Q4

Included observations: 32

Variable Coefficient Std. Error t-Statistic Prob.

C 7.85E-07 1.90E-07 4.123073 0.0003

CSG -5.15E-08 9.17E-07 -0.056153 0.9556

VAT -3.59E-07 1.76E-06 -0.204216 0.8397

PG 8.06E-07 1.08E-06 0.747929 0.4607

R-squared 0.022036 Mean dependent var 7.52E-07

Adjusted R-squared -0.082746 S.D. dependent var 1.01E-06

S.E. of regression 1.05E-06 Akaike info criterion -24.57919

Sum squared resid 3.09E-11 Schwarz criterion -24.39597

Log likelihood 397.2670 Hannan-Quinn criter. -24.51845

F-statistic 0.210306 Durbin-Watson stat 0.751318

Prob(F-statistic) 0.888405

Dependent Variable: HTH

Method: Least Squares

Date: 07/12/23 Time: 21:19

Sample: 2014Q1 2021Q4

Included observations: 32

Variable Coefficient Std. Error t-Statistic Prob.

CSG 0.009649 0.020136 0.479194 0.6355

VAT -0.023057 0.038587 -0.597536 0.5550

 PG 2.604342 0.023663 110.0591 0.0000

C 0.017083 0.004183 4.083754

R-squared 0.997724 Mean dependent var -0.071632

Adjusted R-squared 0.997480 S.D. dependent var 0.459380

S.E. of regression 0.023062 Akaike info criterion -4.584753

Sum squared resid 0.014893 Schwarz criterion -4.401536

Log likelihood 77.35605 Hannan-Quinn criter. -4.524022

F-statistic 4090.574 Durbin-Watson stat 0.619103

Prob(F-statistic) 0.000000

Breusch-Godfrey Serial Correlation LM Test:

F-statistic 20.89909 Prob. F(2,26) 0.0000

Obs*R-squared 19.72829 Prob. Chi-Square(2) 0.0001

Test Equation:

Dependent Variable: RESID

Method: Least Squares

Date: 07/12/23 Time: 21:24

Sample: 2014Q1 2021Q4

Included observations: 32

Presample missing value lagged residuals set to zero.

Variable Coefficient Std. Error t-Statistic Prob.

CSG 0.025386 0.013700 1.853057 0.0753

VAT -0.079862 0.027779 -2.874873 0.0080

PG -0.008646 0.015357 -0.562999 0.5783

C 0.000213 0.002695 0.078998 0.9376

RESID(-1) 1.073773 0.185278 5.795473 0.0000

RESID(-2) -0.316223 0.172929 -1.828625 0.0790

R-squared 0.616509 Mean dependent var 2.82E-18

Adjusted R-squared 0.542761 S.D. dependent var 0.021918

S.E. of regression 0.014821 Akaike info criterion -5.418192

Sum squared resid 0.005711 Schwarz criterion -5.143367

Log likelihood 92.69108 Hannan-Quinn criter. -5.327095

F-statistic 8.359637 Durbin-Watson stat 2.268303

Prob(F-statistic) 0.000081
Heteroskedasticity Test: Breusch-Pagan-Godfrey

F-statistic 1.297203 Prob. F(3,28) 0.2949

Obs*R-squared 3.904835 Prob. Chi-Square(3) 0.2719

Scaled explained SS 1.661932 Prob. Chi-Square(3) 0.6454

Test Equation:

Dependent Variable: RESID^2

Method: Least Squares

Date: 07/12/23 Time: 21:25

Sample: 2014Q1 2021Q4

Included observations: 32

Variable Coefficient Std. Error t-Statistic Prob.

C 0.000498 8.92E-05 5.583661 0.0000

CSG -0.000172 0.000429 -0.401878 0.6908

VAT -0.001087 0.000822 -1.321622 0.1970

PG 0.000463 0.000504 0.918151 0.3664

R-squared 0.122026 Mean dependent var 0.000465

Adjusted R-squared 0.027957 S.D. dependent var 0.000499

S.E. of regression 0.000492 Akaike info criterion -12.28155

Sum squared resid 6.77E-06 Schwarz criterion -12.09833

Log likelihood 200.5048 Hannan-Quinn criter. -12.22082

F-statistic 1.297203 Durbin-Watson stat 0.529339

Prob(F-statistic) 0.294856
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