Tax Structure and Economic Growth in Nigeria: Evidence from Vector Autoregressive Model

This paper used quarterly time series data to examine the tax structure and economic growth in Nigeria over a period of 2006 to 2021. Data were secondarily sourced from Federal Inland Revenue Service (FIRS) and Central Bank of Nigeria (CBN) bulletins. The tax structure variables on which data were collected are the company income tax, value added tax and petroleum profit tax. Data were also collected on gross domestic product which is a proxy for economic growth. The data generated were analyzed using vector autoregressive model. The study found a bidirectional causality between the GDP and value added Tax. The lags of the company Income Tax cannot significantly cause the GDP. Lags of value added Tax can cause company Income Tax, but lags of company Income Tax cannot cause Value added and petroleum Income Tax. The study therefore recommends that the tax administrative loopholes, including tax evasion and avoidance should be prevented to improve tax revenue and GDP of the Federal Republic of Nigeria.