TAX REVENUE AND WELFARE OF NIGERIANS

Abstract

Tax system is one of the major sources of government earnings and spending, but non-commitment of eligible tax payers to pay the due taxes, place huge burden on government's responsibility to the citizens. This study investigated the effects of changes in fiscal policy (taxes) on government and citizens welfare in Nigeria from 1986-2020. The period covered is considered significant, because of its time lag and several tax policies and reforms introduced by the government, and its subsequent implementation. This study used an ex-post-facto research design using annual secondary data from accredited sources majorly from Federal Inland Revenue Service (FIRS), and Central Bank of Nigeria (CBN) annual statistical bulletin for the period. Autoregressive Distributed Lag (ARDL), Granger causality test, and Wald bounds test were used to analyze the data. Results revealed a linear long run association among the variables. Thresholds relationship were examined – revealing linear-linear relationship both at the upper and lower regime, this indicates no thresholds relationships. The study concluded that as total tax revenue has a positive insignificant impact on consumption at 11.8%. Therefore, it is recommended amongst others that, to build and maintain the culture of household consumption, there is need for a review and restructure of the nation's tax policy and administrative system by promoting compliance culture developed through taxpayer education