ABSTRACT

The study investigated effect of corporate tax on economic growth of Nigeria from 1986 to 2017. It adopted ex post facto research design as it extracted secondary data collected from Central Bank of Nigeria (CBN) statistical bulletin 2017 and various Federal Inland Revenue Service reports. The choice of the period is to ascertain the effectiveness of corporate tax after the deregulation of the economy in 1986. It used petroleum profits tax revenue and company income tax as proxies for corporate tax while percent rate change in real gross domestic product was adopted as proxy for economic growth of Nigeria. The independent variables were logged to bring them to the magnitude with the dependent variable. It used the augmented Dickey-Fuller unit root test to confirm the stationary level of the variables which established 1(1) order of integration for petroleum profit tax and company income while percent rate change in real gross domestic product was stationary at level. The study therefore adopted autoregressive distributed lag technique of data estimation the estimate the relationship of the variables. The study found that petroleum profit tax has negative insignificant relationship with economic growth both at the short and long run and it has significant effect on percentage change in real gross domestic product of Nigeria. It also confirms the existence of long run equilibrium relationship between company income tax and percent rate change in real gross domestic product economic growth in Nigeria and that company income tax has significant effect on percentage change in real gross domestic product of Nigeria. The study therefore concludes that corporate tax has significant effect on economic growth of Nigeria and recommends that government should always utilize revenue derived from petroleum profit tax on expenditure that would yield both short and long run growth of the economy and government should expend revenue from company income tax on agriculture to enhance short run equilibrium relationship with economic growth.