Effect of Tax Reforms on Federal Government Internally Generated Revenue in Nigeria

This study examined the effect of tax reforms on Federal Government Internally Generated Revenue in Nigeria for the period 2005 - 2020. The specific objectives are to evaluate effect of petroleum profit tax reform and company income tax reform on internally generated revenue system in Nigeria. The theoretical underpinning of this study is based on the Ability-to-pay theory. The study was an ex-post-facto research which made use of secondary data obtained from the Central Bank Statistical Bulletin. The study employed descriptive statistics and graphical representation using E-Views 10 software to check for the trends, linearity or otherwise of the data. Regression model was applied in determining the extent of the effect exerted on federal government internally generated revenue by Petroleum Profit Tax (PPT) and Company Income Tax (CIT). The result of the analysis revealed that petroleum profit tax has significant and positive effect on internally generated revenue while company income tax depicts a negative and insignificant effect on IGR. The implication of this finding is that the level of internally generated revenue has been very much influenced by petroleum profit tax. The study concluded that tax reform is necessary and healthy for emerging nation economies like Nigeria, as it helps to increase revenue generation, reduce or block leakages and improve efficiency thereby increasing or promoting government internally generated revenue. This study therefore recommends that the Federal Government of Nigeria should continue to enact friendlier Petroleum Profit Tax Reforms which will ensure persistent improvement on internal revenue generation in the short and long run.