A Tado-Yamamoto Granger-Non-Causality Approach to the Impact of Taxation on Infrastructural Development in Nigeria

Akpa Adah Amona, Itanyi Obiamaka, Agbor Righteous, Ademu Mohammed Lawal, Musa Sunday Attah, Bako Micheal James and Opeyemi Adeniji Abideen
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Akpa Adah Amona: Nasarawa State University, Keffi
Itanyi Obiamaka: Nile University of Nigeria, Abuja
Agbor Righteous: Nasarawa State University, Keffi
Ademu Mohammed Lawal: Nasarawa State University, Keffi
Musa Sunday Attah: Nasarawa State University, Keffi
Bako Micheal James: Nasarawa State University, Keffi
Opeyemi Adeniji Abideen: Nasarawa State University, Keffi

International Journal of Research and Innovation in Applied Science, 2025, vol. 10, issue 6, 1-13

Abstract: This study assessed the impact of taxation on infrastructural development in Nigeria using the Tado-Yamamoto Granger-Non causality approach. Time series data on Capital Gain Tax (CGT), Withholding Tax (WHT), Stamp Duty (SDY), and Infrastructural Development (IND) spanning from 2000 to 2024 elicited from the data banks of Federal Inland Revenue Service, the Central Bank of Nigeria, and National Bureau of Statistics was used for this study. The Augmented Dickey-Fuller test was used to establish stationarity at first and second difference, making the series suitable for the Tado-Yamamoto model after the serial LM test showed no evidence of autocorrelation in the model. The result aligns with the a priori expectation as CGT (β= 3.333148), WHT (β= 0.303194), and SDY (β= 1.508161) exerted a positive but statistically insignificant impact on infrastructural development in Nigeria. In furtherance, the result of the impulse response showed a minimal long-run reaction of IND to the predictors. Also, this study found that IND is strongly endogenous both in the short and long run, as determined by the variance decomposition. Diagnostic test of inverse roots showed stability in the parameter estimate, implying that the estimated parameters are stable over time. In line with the findings, this study concluded that for the period under review, taxation did not impact significantly on infrastructural development in Nigeria, and as a result recommended the need for a paradigm towards effective tax policy incorporating CGT, WHT, and SDY by the Federal Inland Revenue Service rather than the prevailing undue emphasis on tax yield from the oil sector, personal income tax, and company income tax. Also, the Nigerian government can optimize tax yield and infrastructural development by revamping the postal service to incorporate the vast benefits of the growing e-delivery market in Nigeria.

Date: 2025
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