MACRO ECONOMIC DETERMINANTS AND TAX REVENUE IN NIGERIA

Abstract

This research aims to investigate how macroeconomic factors impact Nigeria's tax revenue. To be precise, the study looked at how Nigeria's tax income is affected by GDP, trade openness, and exchange rates.  Ex post facto research design was used in the study, while the data came from Federal Inland Revenue (FIRS) and Central Bank of Nigeria (CBN) statistical records covering the years 1970–2023. Data collected were analyzed using auto regressive distribution lag model (ARDL) and the result revealed that Nigeria's tax revenue is not significantly affected by GDP in the near term and also  over time, GDP has a negligible negative effect on tax income. It also showed that, in the near term, trade openness significantly increases Nigeria's tax revenue and over time it has a large positive effect on tax revenue. Finally, the exchange rate has a positive but slight impact on Nigeria's tax collection in the near term, but over time, it has a major positive impact. We recommend that, government officials should closely control macroeconomic factors like GDP and exchange rates to promote higher tax revenue; the Nigerian government should continue trade liberalization policies to improve trade openness in the country; new technologies, production innovation, and policies that support sustainable resources should be put into place to boost tax revenue bases.