ABSTRACT

 The study assesses taxation as a toolfor economic development in Nigeria covering the period of1987 to 2018. Data was collectedfrom Federal Inland Revenue Service (FIRS), and international monetaryfund. The data collect were analyzed using relevant econometric models such as Augmented Dickey Fuller Test, Johansen Cointegration test, error correction model and granger causality test. The objectives ofthe study were to investigate the impact oftaxation as a toolfor economic development in Nigeria and to ascertain the causal relationship between taxation and economic development in Nigeria. From the t-test, it was drawn that petroleum profit tax and company income tax have a positive and significant impact on economic development in Nigeria while personal income tax has a positive but insignificant impact on economic development in Nigeria. Also there exists is a causal relationship between taxation and economic development in Nigeria. Based on the result ofthe findings, the study recommended that', since personal income tax had a positive effect on economic development during the period under study, policies should be geared towards improvement ofpersonal income tax and a new way ofprovidingflexible personal income tax should be adopted by the government so as to ensure that this tax significantly improves economic development ofthe economy. Petroleum profit tax made the highest contribution to economic development as shown by the result ofour study, thus, government should ensure that the funds obtainedfrom it is used to diversify the economy awayfrom a monoproduct economy. Company income tax should also be made to contribute to the highest level on economic growth and development in Nigeria.