Assessing the Impact of Tax Reform on Sustainable Revenue Mobilisation in Emerging Markets: Evidence from Nigeria

Abstract

This study assesses the impact of tax reform on sustainable revenue mobilisation in Nigeria. The study employs the quarterly data obtained from Federal Inland Revenue Service records, Central Bank of Nigeria Statistical Bulletin and National Bureau of Statistics from 2011 to 2020. The Johansen Cointegration test and the ordinary least square (OLS) regression technique were used in the analysis, and the result shows that tax reform has a long-run equilibrium relationship with sustainable revenue generation in Nigeria. The resultsalsoshow that only petroleum profit tax, value-added tax and customs and excise duties significantly influence government revenue. The cointegrated relationship between tax reform and sustainable revenue mobilisation implies that the government should continue with the tax reform agenda to improve economic growth and the welfare of the people. Similarly, the reforms should adhere to international best practices. Finally, the insignificant relationship between company income tax and revenue generation suggests that the government must put up adequate efforts to provide an enabling environment for companies to thrive and make significant tax contributions to the growth of the system.