Publication Details
Abstract
This study examined the effect of digital tax revenue on economic development in Nigeria, focusing on Value Added Tax (VAT) and Company Income Tax (CIT) collected from digital economic activities. The research concentrates on human development, proxied by the Human Development Index (HDI), over 56 quarters spanning from 2011 to 2024. Employing an ex-post facto research design, the study utilizes secondary data sourced from the Federal Inland Revenue Service (FIRS), Central Bank of Nigeria (CBN), National Bureau of Statistics (NBS), and international databases. Data analysis combines descriptive statistics with econometric modeling, specifically the Autoregressive Distributed Lag (ARDL) approach and Error Correction Model (ECM), to capture both short-run and long-run effects. The findings reveal that VAT and CIT revenues do not exert significant short-run effects on human development, though VAT exhibits a marginally positive long-run influence, while CIT does not significantly affect HDI in either the short or long run. The study concludes that digital tax revenue is a critical fiscal instrument with time-dependent effects on Nigeria’s development outcomes. Based on these findings, the study recommends strengthening digital tax infrastructure, strategically allocating VAT revenue toward social development, promoting mechanisms to channel CIT toward human development, and incorporating lagged effects into fiscal planning. The research contributes to knowledge by integrating digital taxation into development analysis and provides a foundation for policy formulation aimed at enhancing the developmental impact of digital tax revenue in Nigeria.