Indirect Taxes and Economic Development in Nigeria

Abstract

Indirect taxes and economic development in Nigeria are the subjects of this study. The Human Development Index (HDI) was employed as a measure of economic development to specifically assess if indirect taxes, such as Value Added Tax (VAT) and Customs and Excise (CED), influence economic development in Nigeria. The study employed an ex post facto research design with secondary data from the Federal Inland Revenue Service, the Nigerian Customs Service, and the Central Bank of Nigeria for the pertinent years 2001-2021). To investigate the correlation between the variables, the ARDL regression econometric analytic approach was applied. This study discovered that while there is a definite positive association between Value Added Tax (VAT) and Nigerian economic progress, the relationship between Customs and Excise Tax (CED) and that development is negative and inconsequential. This study generally concludes that indirect taxes and economic development in Nigeria are significantly related. The study thus urges political decision-makers to work toward further indirect tax reforms, as these significantly impact Nigeria's economic progress.