ABSTRACT

The study investigated the effect ofpetroleum profit tax on income generation and economic growth Nigeria for the period 2005-2014 with specific objectives namely, to examine the extent to which actual petroleum profit tax effects gross domestic product in Nigeria, to examine the extent to which budgeted petroleum profit tax affects gross domestic product in Nigeria and to examine ifthere is a good relationship between petroleum profit tax and gross domestic product in Nigeria. SPSS statistical software was employed in computing the result, time series data were obtained from CBN statistical bulletin 2014. Actual petroleum profit (APPT) has a positive relationship with gross domestic product (GDP) in the years 2005-2014 and it is also statistically significant at 5% level ofsignificance. Also, Budgeted petroleum profit tax (BPPT) had a positive relationship with Gross Domestic Product (GDP) in all the years and also statistically significant at 5% level of significance and finally, the Autocorrelation Test conducted using Durbin-Watson test indicated that there exists a degree of autocorrelation between Actual petroleum profit tax, Budgeted petroleum profit tax and economic growth in Nigeria for which Gross Domestic Product was used as its proxy. The study recommended that the revenue generatedfrom petroleum profit tax should be transparently accountedfor and used judiciouslyfor provision ofinfrastructures and goods and services .Government should minimize or even eliminate widespread leakages and corruption in the tax administration in Nigeria, FIRS should monitor the activities ofpetroleum exploration companies so as to achieve maximum tax to government and the Nigerian National Petroleum Corporation shouldprovide a more reliable template for companies in the upstream to disclose the actual quantity ofoil and gas gotten. This will help move Nigeria forward, better the lives of its citizens and position Nigeria where it ought to be as an oil countryjust like other oil producing countries.