Original Research Article | OPEN ACCESS

Tax Revenue and Capital Expenditure in Nigeria

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Received: February 2, 2020        Accepted: March 31, 2020        Published: March 31, 2020

Citation: Tax Revenue and Capital Expenditure in Nigeria. Account Tax Rev 2005; 4(1):132-147 doi:

© 2005 The authors.
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Abstract

This study aims to evaluate the effect of tax revenues on capital expenditures in Nigeria Economy. Data for the study was collected through secondary source from Federal Inland Revenue Service, Central Bank of Nigeria statistical bulletin and National Bureau of Statistics between periods of 1989 and 2018. A longitudinal research design was adopted, while secondary data were collected from audited financial statements of Federal Inland Revenue Service, CBN statistical bulletin and National Bureau of Statistics between 1989-2018. Data collected were analyzed usinga linear regression method to explain the relationship between variables of tax revenues (oil and non-oil) (independent variable), capital expenditure (dependent variable). The results revealed a statistically significant positive effect of non-oil revenue oncapital expenditure with a p-value of 0.0008 ?0.05, R² =0.3345 and Adjusted R² of 0.3107. The regression results further revealed that the relationship between the oil tax revenues, total tax revenues and capital expenditure are not statistically significant  with a p-value of 0.2997 and 0.0848 ?0.05,R² =0.03835, 0.1023 and Adjusted R² of 0.0703 and 0.0703 respectively. The study concludes that revenue generated from tax has no impact on capital expenditure allocation. The study therefore, recommends that Government should utilize the revenue generated from oil and non-oil tax revenues to invest in other domestic sectors such as Agriculture and manufacturing sector in order to expand the revenue source of the economy and further increase the revenue base of the economy which will in turn increase fund allocated for capital expenditures.a

Keywords: Tax Revenue, Growth, Oil Revenue, Non-Oil Revenue, Capital Expenditure