Effect of Tax Gaps on Emerging Economies: Evidence from Nigerian Economic Development
DOI:
https://doi.org/10.51699/cajitmf.v7i4.1359Keywords:
Tax Gaps, Emerging Economies, Nigerian Economic DevelopmentAbstract
This study examines the effect of tax gaps on emerging economies from 2008 - 2024. Specifically, the study assessed how gaps in petroleum profits tax, education tax, national information technology development fund tax, and capital gains tax affect economic development. Ex-post facto research design was adopted, utilizing secondary data sourced from the Nigeria Revenue Service (NRS) and the Central Bank of Nigeria (CBN) Statistical Bulletin from 2008-2024. Stationarity of the data were tested using the Augmented Dickey-Fuller (ADF) method, while hypotheses were evaluated using the Vector Autoregressive (VAR) model @ 5% significant level with p-values estimated via Gauss-Newton/Marquardt steps. The findings revealed that: petroleum profits tax gap has a negative and non-significant effect on economic development in Nigeria; education tax gap has a negative and significant effect on economic development in Nigeria; national information technology development fund tax gap has a positive and non-significant effect on economic development in Nigeria. Capital gain tax gap has a positive and non-significant effect on economic development in Nigeria. By implication, shortfalls in expected revenue from the education tax have a reverse or indirect effect on economic development, while increase in expected revenue has a direct effect on economic development. The study recommends that the Nigeria Revenue Service should intensify efforts to audit and monitor the petroleum sector more strictly to reduce profit-shifting and under-reporting of taxable income by oil companies. TETFund and the Federal Ministry of Education should collaborate with NRS to ensure strict enforcement of the Education Tax Act by large corporations. The National Information Technology Development Agency (NITDA) should prioritize awareness campaigns targeting ICT companies and corporate taxpayers to increase voluntary compliance.
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Copyright (c) 2026 Oketa, Eunice Chiamaka, Okwu, Peter Ifeanyi, Nweke-Charles Uchenna Esther, Udochukwu Chikaodili Nkemdilim, Oge Silas Ifeanyichukwu, Dike Ubochioma
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