Tax Revenue and Human Capital Development in Nigeria

Abstract

This study examined the impact of tax revenue on human capital development in Nigeria from 2013 to 2022.Data on five significant taxes in Nigeria were observed as explanatory variables: Petroleum Profit Tax (PPT), Educational Tax (EDT), Value Added Tax (VAT), Company Income Tax (CIT), and Customs and Excise Duties (CED). At the same time, Nigerian Human Development Index (HDI) were utilized to measure Human Capital Development. The study used secondary data obtained from the Central Bank Nigeria annual statistical bulletin, World Development Indicator and Federal Inland Revenue Service publications. The Augmented Dickey-Fuller Unit root test was used to determine the stationarity and order of integration of the research variables. Thereafter, these variables were integrated into order one. Ordinary Least Square (OLS) Log –Log Model was adopted to estimate parameters for analysis. Results showed that CIT and VAT positively and significantly affect Human Capital Development. PPT and EDT showed positive but insignificant effect, while CED has a negative insignificant effect on Human Capital Development in Nigeria. It was recommended, among other things, that Nigerian government, through the fiscal policy makers should utilize significant proportion of tax revenue in financing human capital development infrastructure.