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2012 (Vol. 4, Issue: 3)
Article Information:

Petroleum Profit Tax and Economic Growth: Cointegration Evidence from Nigeria

G.N. Ogbonna and Appah Ebimobowei
Corresponding Author:  Appah Ebimobowei 

Key words:  Co-integration, economic growth, Nigeria, petroleum profit tax, tax, ,
Vol. 4 , (3): 267-274
Submitted Accepted Published
February 28, 2012 March 16, 2012 June 25, 2012
Abstract:

This study investigates the impact of petroleum profit tax on the economic growth of Nigeria. To achieve the objective of this paper, relevant secondary data were collected from the Central Bank of Nigeria (CBN) and the Federal Inland Revenue Service (FIRS) from 1970 to 2010. The secondary data collected from the relevant government agencies in Nigeria were analysed with relevant econometric tests of Breusch-Godfrey Serial Correlation LM, White Heteroskedasticity, Ramsey RESET, Jarque Bera, Johansen Co-integration and Granger Causality. The results show that there exists a long run equilibrium relationship between economic growth and petroleum profit tax. It was also found that petroleum profit tax does granger cause gross domestic product of Nigeria. On the basis of the empirical analysis, the paper concludes that petroleum profit tax is one of the most important direct taxes in Nigeria that affects the economic growth of the country and therefore should be properly managed to reduce the level of evasion by petroleum exploration companies in Nigeria. The paper recommends among others that companies involved in petroleum operations should be properly supervised by the relevant tax authority (FIRS) to reduce the level of tax evasion; government should show more accountability in the management of tax revenue and finally, the level of corruption in Nigeria and that of government officials should be drastically reduced to win the confidence of tax payers for voluntary tax compliance.
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  Cite this Reference:
G.N. Ogbonna and Appah Ebimobowei, 2012. Petroleum Profit Tax and Economic Growth: Cointegration Evidence from Nigeria.  Asian Journal of Business Management, 4(3): 267-274.
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ISSN (Online):  2041-8752
ISSN (Print):   2041-8744
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