NDIRECT TAX AND PERFORMANCE OF THE NIGERIAN ECONOMY: AN EMPIRICAL ASSESSMENT

Abstract

This study examines indirect tax and the performance of the Nigerian economy using times series data for the period 1985 to 2015. Data were extracted from the Central Bank of Nigeria (CBN) statistical bulletin. The data analysis techniques employed is regression analysis using the ordinary least squares, error correction mechanism (ECM) and co-integration techniques. This study reveals that there exist both long and short run dynamic relationships between indirect tax and the performance of the Nigerian economy. Custom and excise duty (CED) is positive and significant on the Nigerian economic performance. Value Added Tax (VAT) is positive and significant on the economy in the short run. Inflation as a control variable has a negative impact on the Nigerian economy and was statistically significant. The study recommends that the government has to come up with effective policies that could ensure the proper administration of VAT and custom and excise duty as well as fight every possible diversion of the revenues from these sources occasioned by systemic corruption. In this way, excess funds leakages resulting in too much money in circulation would be reduced so as to control inflation.