TAX REVENUE AND ECONOMIC GROWTH IN COTE D’IVOIRE, GHANA AND NIGERIA

TAX REVENUE AND ECONOMIC GROWTH IN COTE D’IVOIRE, GHANA AND NIGERIA

ABSTRACT

This work examined the effect of tax revenue on economic growth in Cote d’Ivoire, Ghana and Nigeria from 2026 to 2020. Specifically, the study sought to; determine the effect of value added tax on economic growth; investigate the effect of personal income tax on economic growth; ascertain the effect of petroleum profit tax on economic growth; examine the effect of company income tax on economic growth; and evaluate the effect of custom and excise duties on economic growth in Cote d’Ivoire, Ghana and Nigeria. Relevant conceptual, theoretical and empirical literatures were reviewed. The study is anchored on Solow’s Theory of Economic Growth and Endogenous Growth Model. Value added tax (VAT), personal income tax (PIT), petroleum profit tax (PPT), company income tax (CIT), and custom and excise duties (CED) were employed as the independent variable while real gross domestic product (RGDP) was employed as the dependent variable. Longitudinal research design was employed. The data used in this study were sourced from the central bank of the sampled countries and World Bank Development Indicators. Descriptive statistics, Augmented Dickey Fuller unit root test, Johansen Cointegration Test and Error Correction Mechanism (ECM) were used in analyzing the data. The results of the descriptive statistics show that all the variables for each of the sampled countries were normally distributed. Augmented Dickey Fuller unit root test indicates that all the variables were differenced once for each of the sampled countries to assume stationarity. Johansen Cointegration test results confirm the existence of long-run relationship between the variables used in the study. The study found that value added tax has significant effect on economic growth in Cote d’Ivoire, Ghana and Nigeria at cross country level. The results also indicate that personal income tax has no significant effect on economic growth in Cote d’Ivoire, Ghana and Nigeria at cross country level. Petroleum profit tax was found to have significant effect on economic growth in Cote d’Ivoire, Ghana and Nigeria at cross country level. Company income tax was found to have significant effect on economic growth in Cote d’Ivoire, Ghana and Nigeria at cross country level. The study concludes that tax revenue has significant positive effect on economic growth in Cote d’Ivoire, Ghana and Nigeria. The study recommends that government should provide tax incentives to specific sectors or for such specific activities in order to stimulate or retain investment in the sector.

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