The relationship between tax formation and economic growth in Nigeria and Ghana

Abstract

The study examined the relationship between tax formation and economic growth of Nigeria and Ghana using time series data for the period of 2015 to 2021. The study utilized statistical technique of Ordinary Least Squares (OLS) regression method of data analysis. The study used Gross Domestic Product as proxy for economic growth being the dependent variable while.Gross Tax Revenue Formation was the independent variable. The study revealed that increase in tax formation led to insignificant increase in economic growth in the Nigerian economy within the study period. This was evidenced as there was a positive, but insignificant relationship between tax formation and economic growth in Nigeria. Also, the study discovered that increase in tax formation led to significant increase in economic growth in Ghana as a positive and significant relationship sufficed between tax formation and economic growth in Ghana. It was concluded that Nigeria had a marginally higher gross tax revenue formation than Ghana, but Ghana had more stable economic growth than Nigeria. The government should put in place adequate measure to ensure that revenue generated or formed from taxes effectively utilized to develop and grow both economies