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2022-09-27
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Copyright (c) 2022 Dr Uche Okoro Orji, Nzubechi Emmanuella Emelogu
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Appraising The Impact Of Direct Tax Revenue On Income Inequality In Nigeria
Dr Uche Okoro Orji
Abia State University Uturu
Nzubechi Emmanuella Emelogu
Abia State University, Uturu
Keywords: Company, Direct tax, Income, Inequality, Petroleum, Profit, Revenue
Abstract
The study focused on appraising the impact of direct tax revenue on income inequality in Nigeria. The study aimed at assessing the impact of company income tax and petroleum profit tax in creating or reducing income inequality in Nigeria. Ex-post facto research design was adopted where time series data extracted from Central bank of Nigeria, Federal Inland Revenue Service and Index Mundi for the periods 1990 to 2020 were used. The dependent variable for the study was income inequality measured with Gini Coefficient while the independent variable was direct tax revenue which consists of Company income tax and Petroleum profit tax. Different econometric techniques were applied while the extracted data were analyzed using the Error Correction Model (ECM) under E-views version 10. The result revealed that Company income tax showed a negative and insignificant relationship with income inequality while Petroleum profit tax showed a positive and insignificant relationship with income inequality. The study therefore concludes that company income tax reduces income inequality in Nigeria while Petroleum profit tax increases income inequality in Nigeria. The study recommends among others that Government should ensure that tax rate is progressive such that the rich pays higher tax than the poor. Also, company income tax should be given more drive as it has been found to help in reducing income inequality in Nigeria.
Author Biography
Dr Uche Okoro Orji, Abia State University Uturu
A Chartered Accountant and lecturer in the Department of Accounting, Abia State University Uturu, with research interest in the areas of Taxation and fiscal policy management, Corporate reporting and corporate governance, Forensic and fraud examination.