how revenue contribute in national development?
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This study examines the contribution to tax revenue for national development in Nigeria. Specifically, the study looks at how the various major sources of tax revenue, such as petroleum profit tax (PPT), companies' income tax (CIT)-direct taxes, and custom and excise duties and value added tax-indirect taxes affect real Gross Domestic Product (GDP) in Nigeria using time series data for the period 1981 to 2013. Error correction model (ECM) is used in analyzing the data. The study carried out test of stationarity of the variables using Augmented Dickey Fuller unit root test and test of long run relationship amongst the variables using Johansen Co-integration test. The study's findings show that tax revenue has little contribution to national development in Nigeria, with some of the taxes having a negative relationship with real GDP. All variables of the study are co-integrated and have a long-run causal relationship that 74.87% of the short run disequilibrium is corrected yearly. The study recommends amongst others that more financial control and value for money audit should be carried out to minimize wastages, inefficiencies and corruption in the Nigerian tax system.
Revenue from taxation and customs provides governments with the funds needed to invest in development, relieve poverty and deliver public services; and the physical and social infrastructure required to enhance long-term growth. Strengthening domestic resource mobilisation is not just a question of raising revenue: it is also about designing a revenue system that promotes inclusiveness, encourages good governance, improves accountability of governments to their citizens, and cultivates social justice. Revenue system design and delivery is also closely linked to domestic and international investment decisions, including in terms of transparency, anti-corruption and fairness, as it may serve to improve the framework for attracting increased private investment. Low-income countries face a number of challenges in increasing their revenue from domestic sources. These include a small tax base, a large informal sector, misuse of transfer pricing, low levels of per capita income, domestic savings and investment plus weak governance and capacity. Though many economies have made noticeable progress in revenue collection in the past decade, half of sub-Saharan African countries mobilise less than 17% of their GDP in tax revenues, below the minimum level considered by the UN as necessary to achieve the Millennium Development Goals. Several Asian and Latin American countries fare little better.1