Electronic Payment Systems and Non-oil Tax Revenue Performance in Nigeria: A Fiscal Capacity Perspective

Abstract

This study examines the impact of electronic payment systems on non-oil tax revenue performance in Nigeria, adopting a fiscal capacity perspective. Using quarterly data from the Federal Inland Revenue Service (FIRS) covering the period from 2011 to 2022, the research employs descriptive statistics, trend analysis, paired sample t-tests, correlation analysis, and ordinary least squares (OLS) regression to evaluate the effect of e-payment adoption on non-oil revenue, company income tax, and value added tax. The results reveal a substantial and statistically significant increase in non-oil tax revenue following the implementation of electronic payment systems, with the mean non-oil revenue rising from ₦452.89 billion in the pre-e-payment era to ₦841.60 billion in the post-e-payment era. The paired sample t-test confirms that this increase is highly significant (p < 0.001), while the regression analysis demonstrates that e-payment adoption, company income tax, and value added tax are all significant positive determinants of non-oil revenue. These findings are consistent with the fiscal capacity framework and support the argument that digital tax reforms enhance revenue mobilization, compliance, and administrative efficiency. The study also addresses gaps in the literature by providing national-level evidence of the effectiveness of electronic payment systems in improving non-oil tax revenue performance in Nigeria. Based on these findings, the study recommends sustained investment in digital tax infrastructure, targeted taxpayer education, and inter-agency collaboration to optimize the benefits of electronic payment systems and strengthen Nigeria’s fiscal sustainability and economic resilience.