Petroleum Profit Tax And Economic Growth In Nigeria

Author(s)

APPAH EBIMOBOWEI , EBIRINGA, O.T ,

Download Full PDF Pages: 12 -22 | Views: 382 | Downloads: 103 | DOI: 10.5281/zenodo.3386712

Volume 1 - September 2012 (09)

Abstract

This study investigates the impact of petroleum profit tax on the economic growth of Nigeria. To achieve the objective of this paper, relevant secondary data were collected from the Central Bank of Nigeria (CBN) and the Federal Inland Revenue Service (FIRS) from 1970 to 2010. The secondary data collected from the relevant government agencies in Nigeria were analysed with relevant econometric tests of Breusch -Godfrey Serial Correlation LM, White Heteroskedasticity, Ramsey RESET, Jarque Bera, Johansen Co-integration, and Granger Causality. The results show that there exists a long run equilibrium relationship between economic growth and petroleum profit tax. It was also found that petroleum profit tax does granger cause gross domestic product of Nigeria. On the basis of the empirical analysis, the paper concludes that petroleum profit tax is one of the most important components direct taxes in Nigeria that affects the economic growth of the country and therefore should be properly managed to reduce the level of evasion by petroleum exploration companies in Nigeria. The paper recommends among others that companies involved in petroleum operations should be properly supervised by the relevant tax authority (FIRS) to reduce the level of tax evasion; government should show more accountabi lity in the management of tax revenue and finally, the level of corruption in Nigeria and that of government officials should be drastically reduced to win the confidence of tax payers for voluntary tax compliance.

Keywords

Tax, Petroleum profit tax, economic growth, co-integration, Nigeria

References

  1. Anyanfo, A.M.O. (1996). Public Finance in a Developing Economy: The Nigerian Case, Enugu: Department of Banking and Finance, University of Nigeria, Enugu Campus.
  2. Anyanwu, J.C. (1993). Monetary Economics: Theory, Policy and Institutions, Onitsha: Hybrid Publishers.
  3. Anyanwu, J.C. (1997). Nigerian Public Finance, Onitsha: Joanne Educational Publishers.
  4. Appah, E. (2004). Principles and Practice of Nigerian Taxation, Port Harcourt: Ezevin Mint Printers and Publishers.
  5. Appah, E. (2010a). “The Problems of Tax Planning and Administration in Nigeria: The Federal and State Governments Experience”, International Journal of Labour and Organisational Psychology, 4(1 & 2): 1-14.
  6. Appah, E. (2010b). Accounting for Oil and Gas Business, Port Harcourt: Ezevin Minting, Printing and Publishing Enterprises.
  7. Appah, E. and Oyandonghan, J.K. (2011). “The Challenges of Tax Mobilization and Management in the Nigerian Economy”, Journal of Business Administration and Management, 6(2): 128-136.
  8. Ariwodola, J.A. (2005). Companies Taxation in Nigeria including Petroleum Profit Tax, Lagos: JAA Nigeria Limited.
  9. Asteriou, D. and Hall, S.G. (2007). Applied Econometrics: A Modern Approach, London: Palgrave and Macmillan.
  10. Azaiki, S. and Shagari, S. (2007). Oil, Gas and Life in Nigeria, Ibadan: Y-Books, a division of Associated Books Makers of Nigeria.
  11. Azubike, J.U.B. (2009). “Challenges of Tax Authorities, Tax Payers in the Management of Tax Reform Processes”, The Nigerian Accountant, 42(2): 36-42.
  12. Bhartia, H.L. (2009). Public Finance (14th ed.), New Delhi: Vikas Publishing House PVT Ltd.
  13. Buari, A.L. (1993). Straight to the point ICAN/Polytechnic Public Finance, Ilorin: University of Ilorin Press.
  14. Central Bank of Nigeria (2008). Statistical Bulletin, Golden Jubilee Edition, December, 2008, Abuja, CBN Statistical Department.
  15. Dwivedi, D.N. (2002). Managerial Economics (6th ed.), New Delhi: Vikas Publishing House PVT Ltd.
  16. Gujarati, D.N. and Porter, D.C. (2009). Basic Econometrics (5th ed.), New York, NY: McGraw Hill Publishing.
  17. Jhingan, M.L. (2004). Money, Banking, International Trade and Public Finance, New Delhi: Vrinda Publications.
  18. Musgrave, R.A. and Musgrave, P.B. (2006). Public Finance in Theory and Practice. New Delhi: Tata McGraw Hill.
  19. Nigerian Accounting Standards Board (1994). Statement of Accounting Standard No. 14-Petroleum, Lagos.
  20. Nwadighoha, C.E. (2007). Oil and Gas Accounting, Enugu: Ephraimites Printing and Publishing (Nig) Ltd.
  21. Nwezeaku, N.C. (2005). Taxation in Nigeria: Principles and Practice, Owerri: Springfield Publishers Limited.
  22. Nzotta, S.M. (2007). “Tax Evasion Problems in Nigeria: A Critique”, The Nigerian Accountant, 40(2): 40-43.
  23. Odusola, A. (2006). “Tax policy reforms in Nigeria”, World Institute for Development Economics and Research, Research Paper No. 2006/03. http://www.wider,unu.edu
  24. Ogbonna, G.O. (2011). “Petroleum revenue and the economy of Nigeria”, Ph.D. Dissertation, Department of Accounting, University of Port Harcourt, Nigeria.
  25. Oremade, T. (2006). Petroleum Profit Tax in Nigeria, Ibadan: Evans Brothers Nigeria Publishers.
  26. Ola, C.S. (2001). Income Tax Law and Practice in Nigeria, Ibadan: Heinemann Educational Books (Nigeria) Plc.
  27. Osiegbu, P.I., Onuorah, A.C. and Nnamdi, I. (2010). Public Finance: Theories and Practices, Asaba: C.M. Global Company Ltd.
  28. Sharp, A.M., Register, C.A. and Grimes, P.W. (2002). Economics of Social Issues (15th ed.), New York, NY: McGraw-Hill Higher Education.
  29. Wooldridge, J.M. (2006). Introductory Econometrics: A Modern Approach (3rd), Mason: Thomson Learning.

Cite this Article: