Moderating Role of Democracy in the Taxation-Economic Growth Nexus in Nigeria

Résumé

This study examined the impact of tax revenue on GDP growth in Nigeria, focusing on the moderating role of democracy. Using a dataset from 1984 to 2023, a mixed-methods approach was employed, combining quantitative and qualitative analyses. Quantitative methods included Ordinary Least Squares (OLS) regression, Generalized Linear Model (GLM), and the Augmented Dickey-Fuller (ADF) Test to address multicollinearity and stationarity issues. Control variables were political stability, government effectiveness, regulatory quality, rule of law, control of corruption, inflation, and trade openness. Robustness checks involved interaction terms of company income tax, personal income tax, and petroleum profit tax with a democracy dummy variable. Qualitative data from interviews and case studies were analyzed using thematic analysis and triangulation. Results indicate that tax revenue has a positive but insignificant effect on GDP growth, and democracy does not significantly moderate this relationship. Control variables also show no significant impact on GDP growth. These findings suggest that merely increasing tax revenue and adopting democratic governance are insufficient for substantial economic growth in Nigeria. The study emphasizes the importance of addressing structural and institutional weaknesses and adopting a holistic policy approach to enhance economic performance.