Taxation Project Topics

Tax Revenue and Infrastructural Development in Nigeria (1994 – 2017)

Tax Revenue and Infrastructural Development in Nigeria (1994 – 2017)

Tax Revenue and Infrastructural Development in Nigeria (1994 – 2017)

Chapter One


The main objective of this study is to evaluate the effect of tax revenue on infrastructural development in Nigeria.

The specific objectives are to:

  •  Evaluate the impact of Petroleum Profit tax on infrastructural development in Nigeria.
  • Access the impact of Company Income Tax on infrastructural development in Nigeria.
  •  Determine the impact Value Added Tax on infrastructural development in Nigeria.
  • Access the impact of Custom and Excise Duties on infrastructural development in Nigeria.



Government Revenue

The term revenue has been defined by various authors in different ways. Adam (2006) defined revenue as the fund required by the government to finance its activities. These funds are generated from different sources such as taxes, borrowing, fines, fees etc. It is also defined as the total amount of income that accrues to an organization within a specified period of time (Hamid, 2008). Bhaha (2001) contends that revenue include “routine and “earned” income. For these reasons, according to him, revenue do not include borrowing and recovery of loans from other parties, but it include tax receipts, donations, grants, fees and fines and so on. Similarly, Peace (1986) defined government revenue as all the money received other than from issue of all debts and liquidation of investments. Government revenue includes tax collections, charges and miscellaneous revenues, utility and insurance trust revenue for all funds and agencies of a government. This is money received by a government. It is an important tool of the fiscal policy of the government and is the opposite factor of government spending. Revenue earned by the government are received from sources such as taxes levied on the incomes and wealth accumulation of individual and corporations and on the goods and services produced, exports and imports, nontaxable sources such as government owned corporations incomes, central bank revenue and capital receipts in the form of external loans and debts from international financial institutions. It is used to benefit the country. Government use revenue to better develop the country, to fix roads, provide steady power supply and adequate water supply etc. The money that the government collects pays for the services that are provided for the people. The sources of finance used by the federal government are mainly taxes paid by the public.

Tax Revenue

A tax (from the Latin taxio) is a mandatory financial charge or some other type of levy imposed upon a taxpayer (an individual or a legal entity) by a state or the functional equivalent of a state in order to fund various public expenditures. While taxation is the process whereby charges are imposed on individual or property by the legislative branch of the federal government and by many state governments to raise funds for public purpose. Tax is a compulsory levy imposed on a subject or on his properties and this is done by the government to provide security, social amenities, and create suitable conditions for the wellbeing of the society (Oluyombo & Olayinka, 2018). According to Ezu and Okoh (2016), tax is a burden which every citizen must bear to sustain the government because the government has certain functions to perform for the benefits of those it governs Tax revenue is the income that is gained by government through taxation. Taxation is the primary source of income for a state. Revenue may be extracted from sources such as individuals, public enterprises, trade, and royalties on natural resources and / or foreign aid. An inefficient collection of taxes is greater in countries characterized by poverty, a large agriculture sector and large amounts of foreign aid. Just as there are different type of tax (such as Petroleum Profit Tax (PPT), company Income Tax (CIT), Value Added Tax (VAT), etc.), the form in which tax revenue is collected also differs; furthermore, the agency that collects the tax may not be part of central government, but may be a third party licensed to collect tax which they themselves will use. For example, in the UK, the Driver and Vehicle Licensing Agency (DVLA) collects vehicle excise duty, which is then passed onto HM Treasury. In Nigerian context, each tier of government is saddled with the responsibility of collecting different taxes. The federal government collects taxes through the Federal Board of Inland Revenue (FBIR); the agency administers revenue laws that deal with taxes paid by the resident of the federal capital territory and taxes that are paid by corporate bodies (limited liability companies). They are responsible for accounting federal government for all taxes collected. The state government collects taxes through the state Board of internal revenue; the agency primarily administers the personal income tax act, and however, some states of the federation has instituted additional revenue statutes, which they administer. They are responsible for accounting to the state government for all revenue collected. The local government collects taxes through the local government revenue committee; they are responsible for the assessment and collection of all taxes, fines and rates under its jurisdiction and account for all revenue collected to the chairman of the local government.

Petroleum Profit Tax (PPT)

Petroleum Profit Tax (PPT) is the taxation imposed on the profits from the winning of petroleum in the course of petroleum operation in an accounting period. Petroleum operations as defined by the act essentially involve the exploration, development, production and sale of crude oil. The principal legislation guiding the computation of this tax is the petroleum profit tax act 2004 (as amended). The petroleum profit tax act 1959 (PPTA) provides for the imposition of tax on the chargeable profits of companies that are engaged in petroleum operations in Nigeria. Petroleum operations is defined under the PPTA as “the winning or obtaining of oil in Nigeria by or on behalf of a company for its account by any drilling, mining, extracting or other like operations or process, not including refining at a refinery, in the course of a business carried on by the company engaged in such operations and all operations incidental thereto and any sale of or any disposal of chargeable oil by or on behalf of the company”. Gelb (1981) arrived that oil and gas production had been receiving favorable tax treatment for many years, although one special provision dealing with percentage depletion was repeated for most oil and gas produces in 1975. The objectives of petroleum taxation according to Nwete (2004) are numerous among which are: taking in the petroleum industry is a way of achieving government’s objective of exercising right and control over the public asset, government imposes very high tax as a way of regulating the number of participants in the industry and discouraging its rapid depletion in other to conserve some for future generation. Nigerian economy is dependent on oil as it cannot finance social and economic growth in the absence of a large oil revenue base. Oil account for about 90-95% of the export revenue, over 90% of foreign exchange earnings and about 80% of government revenue. It is the most important tax in Nigeria in terms of its share of total revenue, contributing over 70% of government revenue and 95% of foreign exchange earnings (Odusola, 2006).







In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.


Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.


According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.

This study was carried to tax revenue and infrastructural development in Nigeria (1994 – 2017). CBN form the population of the study.




This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.




It is important to ascertain that the objective of this study was to ascertain tax revenue and infrastructural development in Nigeria (1994 – 2017). In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing tax revenue and infrastructural development in Nigeria (1994 – 2017).


This study was on tax revenue and infrastructural development in Nigeria (1994 – 2017). Three objectives were raised which included: Evaluate the impact of Petroleum Profit tax on infrastructural development in Nigeria, access the impact of Company Income Tax on infrastructural development in Nigeria, determine the impact Value Added Tax on infrastructural development in Nigeria and access the impact of Custom and Excise Duties on infrastructural development in Nigeria. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from CBN. Hypothesis was tested using Chi-Square statistical tool (SPSS).


This study explored the relationship between tax revenue and infrastructural development in Nigeria for twenty seven (27) years covering from 1995 – 2021 periods. Existing literature shows that researchers are yet to reach a consensus about the degree of relationship between tax revenue measurements and infrastructural development in Nigeria. Therefore, the relationship and effect thereof, is yet to be well established. This study has contributed to the research effort at empirical measure of the relationship between tax revenue and infrastructural development. Data analysis revealed that a relationship exists between tax revenue variables and infrastructural development, and that tax revenue indices exerted significant relationship with infrastructural development component. As disaggregated components, PPT, CIT, VAT and CED exerted positive relationship with capital expenditure. However, the aggregated effect of tax revenue on infrastructural development is statistically significant at 5% level.


  1. Government should put in place adequate measure to ensure that revenue generated from PPT is effectively utilized to develop and grow the economy through proper infrastructural development.
  2. Considering the positive relationship between CIT and capital expenditure, government should put strict punitive measures in place to sanction corrupt officials as well as establishments that refuses to remit collected CIT funds.
  3. The positive influence of VAT on the economy can be sustained and enhanced if efforts are made by the government and its relevant agencies to exempt infant industries from VAT payment over reasonable period.
  4. Government should develop an effective measure on the collection, keeping and analyzing of records of imported and exported goods and services to be geared towards infrastructural development in Nigeria.



  • Adam, (2006). Public sector accounting and finance. Lagos, Nigeria: Corporate Publishers Ventures. Smith, A. (1776). Wealth of nations. W Strahan and T Cadell, London.
  •  Adegbie, F.F. and Fakile, A.S. (2010): Customs and excise duties contribution towards the development and growth of Nigerian economy. European Journal of Economics, Finance and Administrative Science, 18(3), 9 – 40.
  • Adegbie, F.F., & Fakile, A.S. (2011). Company income tax and Nigeria economic development. European Journal of Social Sciences, 22(2), 309-319.
  •  Adereti, S.A., Sanni, M.R., & Adesina, J.A. (2011). Value added tax and economic growth of Nigeria. European Journal of Humanities and Social Sciences, 10(1), 456-471.
  • Adesoji A. A., & Chike F. O. (2013). The effect of internal revenue generation on infrastructural development. A study of Lagos State internal revenue service. Journal of Educational and Social Research, 3(2), 419-436.
  • Afuberoh, D., & Okoye, E. (2014). The impact of taxation on revenue generation in Nigeria. A study of Federal Capital Territory and selected states. International Journal of Public Administration and Management Research. 2(2), 22-47.
  • Ajike, E. O., Ariguzo, A. V., Akinyosoye O., Nwankwere I. A. & Oyedeji, F. (2020). Internally Generated Revenue and Transport Infrastructural Development in Lagos State Nigeria between 1998 to 2018. Journal of Critical Reviews, 8(01), 987-995.
  • Akinrotimi, I. O. and Lateefat, O. Y. (2017). Analysis of internally generated revenue and infrastructural development of public universities in Ondo State, Nigeria. Global Journal of Commerce & Management Perspective, 6(1), 24-33.
  • Akpotoboro, P. (2009). Doing Business in the oil and Gas sector in Nigeria. Uk Trade and investment conference presentation paper.



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