Tax Revenue and Security Expenditure of Nigeria

Authors

  • Okafor, Cynthia Onyinye
  • Okafor, Gloria Ogochukwu

Abstract

This study examined the relationship between Tax Revenue and Security Expenditure with a focus on Nigeria. The specific objectives were to determine; the relationship between value added tax, companies’ income tax, petroleum profit tax and security expenditure of Nigeria from 2007-2021. This study employed the use of time series data and Ex-post facto research design was adopted. Secondary data were sourced from Ministry of Finance statistical bulletins, Central Bank of Nigeria (CBN) Statistical Bulletin, Federal Inland Revenue Service (FIRS), World Bank Statistical Bulletin and Annual Abstract of Statistics from the National Bureau of Statistics (NBS). Descriptive statistics were utilised to describe the mean, median, standard deviation, skewness, maximum and minimum of the study variables while Inferential statistics of the hypotheses were carried out with the aid of E-views 10 statistical software using Augmented Dickey Fuller (ADF) test, Pearson Co-efficient of Correlation and Ordinary Least Square (OLS) regression analysis. The study found that there is a positive and significant relationship between value added tax and security expenditure 1 = β1 = 0.593409; p-value = 0.0398<0.05); a positive and significant relationship between company income tax and security expenditure (β1 = 0.393576; p-value = 0.0007<0.05); a positive and significant relationship between petroleum profit tax and security expenditure 1 = 0.612066; p-value = 0.0403<0.05).The conclusion reached in this study is that tax revenue has a statistically significant effect on security expenditure of Nigeria at 5% level of significance. It was recommended inter alia that Government needs to increase its allocation to the priority sectors of the economy such as security, agriculture and industry in order improve on the welfare of the citizenry.

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Published

2023-05-05