TAX REVENUE AND ECONOMIC GROWTH OF TELECOMMUNICATION SECTOR IN NIGERIA (2001-2018)

Abstract

This study examined tax revenue and economic growth of telecommunication sub-sector in Nigeria. Early research works identified that taxation of GSM telecommunication sub-sector as evidenced by the taxes paid has not contributed to the economic growth in Nigeria. Therefore, the objective of the study was to examine the effect of tax revenue proxied by Value Added Tax (VAT) on the economic growth, proxied by Real GDP of the telecommunication sub-sector. The study was conducted using the annual time series data, which covered a period of 18 years (2001 to 2018). The data were largely obtained from the Central Bank of Nigeria’s (CBN) Annual Reports and Statistical Bulletin, Federal Inland Revenue Service (FIRS) Annual Report, Companies Audited Financial Statements and National Bureau of Statistics (NBS) Database 2018 and the main estimation technique employed is Autoregressive Distributed Lag (ARDL) approach as enunciated by Pesaran & Shin (1999) and developed by Pesaran, Shin & Smith (2001) involving unit root test, co-integration test, short-run and long-run estimations. In the ARDL regression analysis, Economic Growth indicator is regressed against its own lag and the tax indicator selected. Findings revealed that value added tax (with Adjusted R 2 of 0.515, and F-Statistic [Prob.(F-Stat)] of 6.66 [0.006] is significant. VAT has significant effect on the economic growth of telecommunication sub-sector in Nigeria for the period under study. The study therefore concluded that tax revenue has positive effect on the economic growth of telecommunication sub-sector in Nigeria. Thus, it was recommended among others that government should develop more workable policies in the utilization of tax revenue while companies in the GSM telecommunication sub-sector should embrace voluntary tax compliance; policy makers should ensure principle of tax justice from the perspective of both the taxpayer and government.