Direct Taxes and Income Redistribution in Nigeria

Onome Christopher Edo ()
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Onome Christopher Edo: Auburn University at Montgomery, Montgomery, Alabama Author-2-Name: EDO Onome Christopher Author-2-Workplace-Name: Department of Information Systems, College of Business, Auburn University at Montgomery, Montgomery, Alabama. Author-3-Name: AKHIGBODEMHE Emmanuel Justice Author-3-Workplace-Name: Department of Economics, Faculty of Social Sciences, University of Benin, Edo- State- Nigeria. Author-4-Name: EDEOGHON Innocent Osaremen Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:

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Abstract: Introduction - Income redistribution is central to the development of any nation. However, the issue of generating income and its redistribution in Nigeria has been challenging overtime, with the nation depending largely on oil with little consideration on other sources of income. Also, insufficient tax resources, tax collectors' illicit activities and a lack of awareness of the value of paying tax by taxpayers are some of the problems facing the country in terms of tax revenue generation. Objective - Our study therefore investigated the impact of direct taxes on income redistribution in the context of Nigeria, using company income tax, personal income tax, petroleum profit tax and education tax as direct tax variables. Methodology/Technique - The study covered the period 1990 to 2019 using annualized data set from Federal Inland Revenue Service (FIRS) and Central Bank of Nigeria Statistical Bulletin. The study employed the Fully Modified Least Squares (FMOLS) to analyze the data. Research Findings - Empirical results of our study revealed that, company income tax and education tax had insignificant negative effects on income redistribution, while personal income tax and petroleum profit tax had significant positive effects on income redistribution, thus reducing income inequality in the context of Nigeria. Recommendations - We thus recommended "inter alia" that, revenue generated from taxes should be effectively used by government in providing quality infrastructures like schools, railway, healthcare facilities and other business outfits across various states for the general wellbeing of the citizens as this is hoped to close the income distribution gap between the rich and the less privileged in the country. Type of Paper - Empirical.

Keywords: Income redistribution; direct taxes; government expenditure on infrastructural goods; Fully Modified Least Squares (FMOLS), Nigeria; Income Inequality. (search for similar items in EconPapers)
JEL-codes: E21 E42 E62 O23 (search for similar items in EconPapers)
Pages: 15
Date: 2021-06-30
New Economics Papers: this item is included in nep-mac, nep-pbe and nep-pub
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Published in Global Journal of Business and Social Science Review, Volume 9, Issue 2.

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Persistent link: https://EconPapers.repec.org/RePEc:gtr:gatrjs:gjbssr596

DOI: 10.35609/gjbssr.2021.9.2(8)

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