JOURNAL OF ACCOUNTING AND BUSINESS

FEDERAL TAX REVENUE ON GOVERNMENT EXPENDITURE IN NIGERIA

OGUNDEKO SODIQ TEMITAYO, TIJANI JAMIU OLAKUNLE, ZAINAB AYOMIDE OLAYINKA

March 4, 2026

Citation

JOURNAL OF ACCOUNTING AND BUSINESS , Vol. 13 (1) (2026) , pp. 1-23

Details

ISSN: 1596-9912
Published: March 4, 2026
Status: Published

Abstract

This study aimed to further evaluate the relationship between federal tax revenue and government expenditure in Nigeria between the years 2009 to 2023. This research focused on VAT, PPT and CIT as proxies for federal government’s portion of tax revenue and analyzed their significance on capital expenditure. The study drew attention to the challenges attributed to Nigeria's low tax-to-GDP ratio, which limits revenue mobilization, therefore increasing borrowing. The study used time series data to compile data from Central bank statistical bulletin and Federal Inland Revenue Service between 2009 and 2023. Data gathered over the years were analyzed using descriptive statistics, unit root tests and co-integration tests and estimation using fully-modified ordinary least squares (FMOLS), canonical co-integrating regression (CCR) and dynamic ordinary least squares (DOLS). The study revealed that VAT had a positive and significant effect on CAPEX ( = 0.2301, p = 0.0057 < 0.01). It also showed that PPT had a positive and significant effect on CAPEX ( = 0.2301, p = 0.0057 < 0.01). Additionally, CIT was shown to have a positive but statistically insignificant effect on CAPEX ( = 0.3432, p = 0.1752 > 0.1). The study suggested possible fiscal reforms to improve tax collection, reduce overreliance of external borrowing, and promote economic development. The findings are expected to assist policymakers in formulating effective fiscal policies that improve government spending efficiency and promote public welfare.

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