MACROECONOMICS DYNAMICSAND TAX REVENUE PERFORMANCE IN NIGERIA (1987-2016)

Abstract

This paper examined the effect of macroeconomic variables on tax revenue performance in Nigeria from the year 1987 to 2016. The work considered 1987 as the baseline and data were sourced from Central Bank of Nigeria and other Federal Institutions. Ordinary Least Square (OLS) was used for the estimation. Pre and post diagnostics test were conducted prior to analysis. Adjusted R² denotes that the explanatory variables explain about 95% of all the changes in the dependent variable. The p-value and F-statistics were statistically significant at 1% (0.000), meaning that the explanatory variables jointly influence the dependent variable of tax revenue performance. On the aggregate, the results show a significantly positive effect of exchange rate and real gross domestic product on tax revenue performance but inflation rate had negative, but insignificant effect on tax revenue performance in Nigeria within the timeframe. The results indicate that some macroeconomic variables exerted effect on tax revenue performance. The work suggests monetary and fiscal policy resilience to stimulate upward growth and stabilization of macroeconomic variables especially exchange rate and inflation. The aforementioned promote and strengthen investors’ confidence towards attainment of higher tax revenue yield.