The study investigatedon the relationship between tax revenue and public expenditure in Nigeria for the period of 1985-2017. To achieve the objective of the study, relevant secondary data were collected from the Central Bank of Nigeria (CBN) Statistical Bulletin. The study set out to test both long run and causal relationship between tax revenue and public expenditure in Nigeria. An empirical investigation was conducted using time-series data on oil revenue, non-oil revenue and capital expenditure from 1985-2017. The technique employed in the study include were Augmented Dickey Fuller test, Johasen Co-integration test, Vector Error Correction Model, Granger Causality test, and diagnostic test. The results shows a significant long-run relationship and a uni-directional relationship between tax revenue and public expenditure in Nigeria.The study recommends that Government should endeavor to provide social amenities to all nooks and crannies of the country as this will boost the level of tax compliance in Nigeria.
Table of Contents
1. INTRODUCTION
1.1 Background of the study.
1.2 Statement of the Problem.
1.3 Research Questions
1.4 Objectives of the Study.
1.5 Statement of Hypothesis.
1.6 Significant of the study
1.7 Scope and limitation of the study
1.8 Chapter organization
2. LITERATURE REVIEW
2.0 Introduction
2.1 Conceptual literature review
Concept of public expenditure
2.1.1. Types of public expenditure
2.1.2. Purposes of public expenditure
2.1.3. Challenges of public expenditure
2.1.4 TAX REVENUE
Concept of tax revenue
2.1.5. Objectives of tax
Rising of revenue:
Wealth redistribution:
Economic price stability:
Economic growth and development:
2.1.6. There are 3 types of taxes, which are:
Proportional tax:
Progressive tax:
Regressive tax:
2.1.7. TAXES COLLECTED BY FEDERAL GOVERNMENT OF NIGERIA
2.1.8. Challenges of tax revenue collection in Nigeria
2.2 Conceptual Framework
2.3. THEORITICAL FRAME WORK
Wagner’s law of public expenditure
Cost of Service Theory of Taxation
Criticisms of this theory
BENEFIT PRICIPLE OF TAXATION
Criticisms of the theory
Method Adopting in this Research
2.4. Review of empirical analysis
3. RESEARCH METHODOLOGY
3.0 Introduction
3.1 Research Design
3.2 Research Framework
3.3 Data Analysis Techniques
3.4 Source of Data
4. DATA PRESENTATION AND ANALYSIS
4.0 Introduction
4.1 Descriptive Statistics / Summary
4.1.1 Unit Root Test
4.1.2 Co-Integration Test Result
4.1.3 Vector Error Correction (VEC) Model
4.1.4 POST ESTIMATION TEST
4.1.5 STABILITY TEST
4.1.6 Granger Causality Test
4.2. Discussion of Result
5. SUMMARY, CONCLUSSION AND RECOMMENDATION
5.0 Introduction
5.1 Summary
5.2 Conclusion
5.3 Recommendation
Research Objectives and Key Topics
The primary objective of this research is to empirically investigate the relationship between tax revenue and public expenditure in Nigeria between 1985 and 2017 to determine the causal and long-term dynamic impact of fiscal revenue on government spending.
- Analysis of the relationship between oil and non-oil revenue on capital expenditure.
- Evaluation of long-run causality between fiscal revenue and public spending using VEC models.
- Examination of tax collection challenges and administrative bottlenecks in Nigeria.
- Assessment of the role of tax revenue as a tool for economic growth and infrastructure financing.
- Statistical validation of economic theories, specifically the Benefit Principle of Taxation in a developing economy context.
Excerpt from the Book
BENEFIT PRICIPLE OF TAXATION
The benefit principle is a concept in the theory of taxation on from public finance. It bases taxes to pay for public goods expenditures on a politically- revealed willingness to pay for benefits received. The principle is sometimes likened to the function of prices in allocating private goods. In its use for assessing the efficiency of taxes and appraising fiscal policy, the benefit approach was initially developed by Knut wick sell (1896) and Erik Lindahl (1919), two economics of the Stockholm school. Wicksell’s near –unanimity formulation of the premised on just income distribution. The approach extended in the work of Paul Samuelson, Richard Musgrave, and others. It has also been applied to such subjects as tax progressivity, corporation taxes, and taxes on property or wealth. The unanimity rule aspect of wicksell’s approaching in linking taxes and expenditures is cited as a pointof departure for the study of constitutional economics in work of James Buchanan.
The benefit principle takes a market-oriented approach to taxation. The objectives is to accurately determine the optimal amount of received that should be spent on public goods.
Criticisms of the theory
The free-rider problem is the primary criticism given for limiting the scope of the benefit principle. When information about marginal benefit is available only from the individuals themselves, they tend to under report their valuation for a particular good, thus giving rise to the performance to the revelation problem. Each individual can lower his tax cost by under reporting his benefits derived from the public goods or services. One solution will be to implement choice. If tax payers had to pay taxes any way, but could choose their taxes (without the possibility of secrete rebates or similar), then they would have no incentive to hide their true preferences.
Summary of Chapters
1. INTRODUCTION: Outlines the background of the study, identifies the research problem regarding tax revenue and public expenditure, and defines the research questions, objectives, and hypotheses.
2. LITERATURE REVIEW: Covers the conceptual framework, discusses various taxation theories such as the Benefit Principle and Wagner's law, and reviews empirical studies relevant to Nigeria's fiscal landscape.
3. RESEARCH METHODOLOGY: Describes the research design, the specified econometric models using time-series data, and the sources of data collected from the Central Bank of Nigeria.
4. DATA PRESENTATION AND ANALYSIS: Presents the empirical results, including unit root tests, cointegration tests, VEC model estimation, and Granger causality tests to evaluate the research hypothesis.
5. SUMMARY, CONCLUSSION AND RECOMMENDATION: Summarizes the findings of the study, provides a conclusion on the relationship between variables, and offers policy recommendations for the Nigerian government.
Keywords
Tax Revenue, Public Expenditure, Capital Expenditure, Oil Revenue, Non-Oil Revenue, Granger Causality, Co-integration, Nigeria, Fiscal Policy, Economic Growth, VEC Model, Taxation, Infrastructure, Revenue Mobilization, Government Spending.
Frequently Asked Questions
What is the core focus of this research project?
The work investigates the empirical relationship and causal links between tax revenue (both oil and non-oil) and government capital expenditure in Nigeria from 1985 to 2017.
What are the primary thematic areas covered?
The study covers public finance, taxation theory, government fiscal policy, economic growth drivers, and the empirical challenges of tax administration in developing nations.
What is the central research question?
The study seeks to answer whether there is a significant long-run relationship and causal direction between fiscal revenue generation and the subsequent level of public capital expenditure in Nigeria.
Which scientific methodologies are employed?
The researcher uses time-series econometric techniques, specifically the Augmented Dickey-Fuller (ADF) test, Johansen Co-integration test, Vector Error Correction (VEC) model, and Pairwise Granger Causality tests.
What is discussed in the main body of the work?
The main body examines the conceptual and theoretical foundations of taxation, reviews previous empirical studies, details the econometric methodology, and presents a comprehensive data analysis of Nigerian fiscal data.
Which keywords best characterize this research?
Key terms include Tax Revenue, Public Expenditure, Granger Causality, Co-integration, Fiscal Policy, and Economic Growth.
How is the dependency between oil revenue and expenditure analyzed?
The study treats oil revenue as an independent variable and uses regression analysis and cointegration tests to determine its long-term impact on capital expenditure as the dependent variable.
What specific challenges to tax collection in Nigeria are mentioned?
The author identifies corruption, administrative incapacity at state levels, lack of equality in taxation, multiple taxation, and a general lack of good governance as significant barriers.
What is the key conclusion of the study?
The study concludes that there is a significant long-run and uni-directional causal relationship between tax revenue and public expenditure in Nigeria.
What recommendation does the author provide to the government?
The author suggests that the government should actively intervene in economic affairs, expand resource mobilization, improve social amenities to boost tax compliance, and foster a culture of good governance.
- Arbeit zitieren
- Zahradden Adam (Autor:in), 2019, An Analysis of the Relationship between Tax Revenue and Public Expenditure in Nigeria, München, GRIN Verlag, https://www.grin.com/document/506980
