ABSTRACT

 This study examined the impact of tax revenues and tax policy reforms on economic growth of Nigeria. The specific objectives were to evaluate the impact oftax revenues on gross domestic product and gross federally collected revenue and as well assess the impact oftax policy reforms on gross domestic product and federally collected revenue of Nigeria. Time series data from 1970 - 2015 were collected from various issues of Central Bank of Nigeria Statistical Bulletin, Federal Inland Revenue Services and National Bureau of Statistics. The Data Collected were on Value Added Tax, Company Income Tax, Petroleum Profit Tax, Custom and Excise Duties, and Personal Income Tax including Gross Domestic Product, Gross Federally Collected Revenue and dummy variable was used to proxy Tax Policy Reforms in the varioustaxes used. The Augmented Dickey Fuller (ADF), Auto Regressive Distributed Lag (ARDL) and Vector Error Correction Model (VECM) were used to test for stationarity of data, and for long and short run equilibrium relationship of the variables respectively. The result ofthe study indicated that all the individual tax revenues components and tax policy reform were significant and positively signed meaning that an increase in these variables will result to a corresponding increase in revenue generation and economic growth of Nigeria. Despite the existence of a positive relationship between the dependent and the explanatory variables used, it was however discovered that tax policy reform could only account for 35% and 27.5% ofthe changes in gross domestic product and gross federally collected revenue respectively. The study therefore recommends among others that government should trained more tax officials that are adequately remunerated, wellmotivated, properly organized, better equipped and disciplined as these will help to sustain and even improve the tax revenues toward economic growth. Besides, many tax reforms have been carried out in the past with unsustainable outcome due to the ad-hoc basis of the reforms coupled with policy summersault. Hence there is need for more robust, well-articulated and planned tax reforms for a meaningful impact on the overall economic growth of Nigeria. As a result of the preponderance of the informal sector which are outside the tax net and twin menace of tax avoidance and evasion the study also recommended the reduction of company income tax from 30% to 20%, personal income tax from 25% to 17.5% and value added tax from 5% to 15%. This should be passed into law and vigorously pursued by the tax authorities so as capture the informal sector thereby enhancing economic growth via revenue generation.