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Impact of Internally Generated Revenue on Economic Growth in Ebonyi State, Nigeria
Abstract
The study examined the Impact of Internally Generated Revenue on Economic Growth in Ebonyi
State, Nigeria from 2007 to 2022. Specifically, the impacts of internally generated revenue
measured by pay-as-you-earn, withholding tax, direct assessment tax, and administrative tax on
economic growth represented by Gross Domestic Product in Ebonyi State were examined. The
theory of fiscal decentralization was adopted for the study. The study employed ex post facto
research design. Data was obtained through the Ebonyi State Ministry of Budget, Planning,
Research & Monitoring, Office of the Accountant General of the State, and Ebonyi State Internal
Revenue Service (EBSIRS) for the period under study. The multiple linear regression model
involving ordinary least square (OLS) estimation approach using E-view econometric software
version 12 to analyze the data collected. The study made the following findings: that pay-as-youearn has significant negative impact on gross domestic product; that there is presence of negative
and significant impact of withholding tax on gross domestic product; that direct assessment tax
has positive and significant impact on gross domestic product; and that administrative tax has
positive but significant effect on gross f domestic product in Ebonyi State, Nigeria. The study
then recommended among others that Nigerian government should pay particular attention to the
reduction of the pay-as-you-earn (PAYE) rate because high PAYE rate has the tendency of
adversely affecting gross domestic product. Also, the rate of withholding tax should be reduced
to a relatively low level so as to boost gross domestic product and subsequently translate to
economic growth in Ebonyi State, Nigeria. Again, Ebonyi State government should expand the
tax yield through restructuring its direct assessment tax dragnet. Furthermore, to ensure
sustainable gross domestic product through administrative tax, the state government should
encourage her citizens to build trust in it through tax accountability, making sure that the
promises made to the citizens are fulfilled.
