Article 6: PETROLEUM PROFIT TAX AND ECONOMIC GROWTH IN NIGERIA (Vol. 1, Iss. 2, pp. 121-130)

INIMINO, Edet Etim, OTUBU, Osaretin Paul, and AKPAN, James Essien

Text | Abstract | PDF

PETROLEUM PROFIT TAX AND ECONOMIC GROWTH IN NIGERIA

 

 

INIMINO, Edet Etim1, OTUBU, Osaretin Paul2, AKPAN, James Essien3

 

 

1&2Department of Economics, Faculty of Social Sciences, University of Uyo, P.M.B 1017, Uyo Akwa Ibom State, Nigeria

3Department of Economics and Management Science, Nigerian Police Academy Kano, Nigeria.

Email: clergyedet1@yahoo.com

 

A R T I C L E  I N F O

Article Type: Research

Received: 29, JAN. 2020.

Accepted: 15, Feb. 2020.

Published: 20, Mar. 2020.

 

 A B S T R A C T

This paper focused on the impact of petroleum profit tax on economic growth in Nigeria within the period of 1980 to 2017. Therefore, secondary data on gross domestic product and petroleum profit tax were sourced from CBN statistical bulletin. The econometric methods of Generalized Method of Moments (GMM) and Granger Causality test were used. Furthermore, before the GMM and Granger causality tests, the study employed Augmented Dickey-Fuller (ADF) unit root test to ascertain the stationarity of the variables. Based on the results; the ADF stationarity test for each of the series showed that all the variables were stationary at order one. The GMM test showed that petroleum profit tax and economic growth have positive and significant relationship with R2 of 78%. The pairwise granger causality test showed bidirectional causality between petroleum profit tax and economic growth. The study concluded that petroleum profit tax has impacted on economic growth in Nigeria meaningfully during the period of study. Therefore, government should boost petroleum profit tax revenue. This can be achieved by establishing an efficient and effective tax administration to reduce the level of tax evasion. At the same time, remove all administrative loopholes; ensure accountability and transparency from government officials on the management of revenue derived from petroleum profit tax. Also, ensure that the needs of the Niger Delta region are met for conflict-free operation of the oil companies which in turn will increase oil production, petroleum profit tax revenue and economic growth in Nigeria.

 
Keywords:

GMM, Petroleum Profit Tax, Economic Growth and Granger Causality

REFERENCES

  1. Abdul-Rahamoh, F. H., Taiwo & Adejare, A. T. (2013). Analysis of the Effect of Petroleum Tax on Nigeria Economy. Asia Journal of Humanities and Social Sciences, 1(1), 1-12.
  2. Abomaye-Nimenibo, W. A. S., Michael, J. E. M., & Friday, H. C. (2018). An Empirical Analysis of Tax Revenue and Economic Growth in Nigeria from 1980 to 2015. Global Journal of Human-Social Science, Political Science, 18(3), 9-40.
  3. Adegbi, F. F. & Fakile, A. S. (2011). Petroleum Profit Tax and Nigeria Economic Development, International Journal of Research in Computer Application & Management, 1(1), 11-18.
  4. Anyanwu, J. C. (1993). Monetary Economics: Theory, Policy and Institutions. Hybrid Publishers, Onitsha.
  5. Appah & Ebiringa (2012). Petroleum Profit Tax and Economic Growth in Nigeria. International Journal of Management Sciences and Business Research 1(9), 12-22.
  6. Central Bank of Nigeria (2007), Statistical Bulletin, Abuja: Central Bank of Nigeria, Vol. 18, December 2007.
  7. Central Bank of Nigeria (2013). Annual Economic Report 31st December 2013.
  8. Edewusi, D. G. & Ajayi, I. E. (2019). The Nexus between Tax Revenue and Economic Growth in Nigeria. International Journal of Applied Economics, Finance and Accounting, 4(2), 45-55.
  9. Igbasan, E. (2017). Tax Revenue and Economic Growth of Nigeria (1981-2015). An Unpublished Thesis, Babcock University, Ogun State.
  10. Ilaboya & Ofiafor (2014). Petroleum Profit Tax and Economic Growth in Nigeria. British Journal of Business and Management Research, 1(2), 55-67.
  11. Nafziger, E. W. & Auvinen, J. (2003) Economic Development, Inequality and War: Humanitarian Emergencies in Developing Countries. Palgrave Macmillan, Hound Mills.
  12. Ogundana, M. O., Ogundana, M. O., Ogundana, M. O., Ibidunni, S. I., & Adetoyinbo, A. A. (2017). Impact of Direct and Indirect Tax on the Nigerian Economic Growth. Binus Business Review, 8(3), 215-220.
  13. Okoh, J. F., Onyekwelu, U. U. L. & Iyidiobi, F. C. (2016). Effect of Petroleum Profit Tax on Economic Growth in Nigeria. International Journal of Business and Management Review. 5(1), 47-53.
  14. Olatunji, T. E. & Adegbite, T. A. (2014). The Effects of Petroleum Profit Tax, Interest Rate and Money Supply on Nigerian Economy, Global Journal of Commerce & Management Perspective, 3(3), 81-87.
  15. Umo, J. U. (2012). Economics: An African Perspective 2nd Edition. Millennium Text Publishers Limited Plot 6B, Block 22, Humanities Road, Unilag Estate, Magodo, Isheri, Lagos, Nigeria.
  16. Usman, O. A. & Adegbite, T. A. (2015). The Impact of Petroleum Profit Tax on Economic Growth in Nigeria: The Co – Integration Analysis, 25 August 2015, 18th International Academic Conference, London
  17. Yahaya, K. A. & Bakere, T. O. (2018). Effect of Petroleum Profit Tax and Companies Income Tax on Economic Growth in Nigeria. Journal of Public Administration, Finance and Law, Issue 13/2018, 100-120.

 

 

This work is licensed under a Creative Commons Attribution 4.0 International License.