Tax Buoyancy and Elasticity in Nigeria: The Case of Aggregate Tax

Abstract

This study was motivated by the growing demand for government funds to meet up with their expenditures as well as diversification for different streams of income. Empirical evidence has shown that the buoyancy and elasticity of tax are two clear ways of measuring how tax revenue responds to changes in income. This study adopted secondary data sets, which were sourced from CBN statistical Bulletin, National Bureau of statistics (NBS) and Federal Inland Revenue Service (FIRS) of Nigeria. A standard multiple regression estimation procedure in the form of the vector error correction model (VECM) model was adopted. The result from the study showed that tax revenue is significantly buoyant and elastic in Nigeria. In view of the result the study recommended among others that, the government introduces policies that will help her take advantage of the potentials inherent in the country and increase its tax revenue thereby having another source of financing its budget other than the current crude oil proceeds.

Keywords: GDP, Nigeria, Tax Buoyancy, Tax Elasticity, Tax Revenue

Article Review Status: Published

Pages: 20-31 (Download PDF)

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