Effect Of Direct Tax On Consumption In Nigeria:- Chinedu Chinonyerem

ABSTRACT

The study examined the effect of direct tax on consumption in Nigeria from 1981-2018. The data for this study include private consumption expenditure, personal income tax and corporate income tax. Secondary source ofdata was used for this study and was obtained from the various issues of Annual Report of Central Bank of Nigeria and National Bureau of Statistics publication. A linear multiple regression analysis model was used, the model was estimated using Ordinary Least Square (OLS) because ofits best linear. The study found that in Nigeria, there exist a positive significant long-run relationship between Personal Income Tax, Corporate Income Tax and Consumption Expenditure in Nigeria within the period reviewed. The study therefore recommend that government should be mindful of the effect of direct tax on consumption even though the empirical finding ofthe study showed that it had positive effect on consumption expenditure in Nigeria. Furthermore, there is the need for government to broaden the tax base by reviewing the enabling tax laws which will bring in more prospective tax payers into the tax net.