Empirical Analysis of Tax Reforms on Economic Growth in Nigeria: Moderating Effect of Institutional Quality Indicators

Bashiru Umoru; Oghenekparobo Ernest Agbogun; Ifeoma Ethel Ezeabasili; Felicia Ogheneotegiri Eyamu; Victoria Chiamaka Obaro; Cindy N. Odoemene

doi:10.57159/jcmm.5.3.26608

Authors

Bashiru Umoru Department of Finance, Dennis Osadebay University, Asaba, Nigeria https://orcid.org/0000-0002-4445-1407
Oghenekparobo Ernest Agbogun Department of Banking and Finance, Dennis Osadebay University, Asaba, Nigeria https://orcid.org/0009-0009-7289-1782
Ifeoma Ethel Ezeabasili Department of Political Science, Chukwuemeka Odumegwu Ojukwu University, Igbariam Campus, Nigeria https://orcid.org/0000-0003-2415-5616
Felicia Ogheneotegiri Eyamu Department of Banking and Finance, Dennis Osadebay University, Asaba, Nigeria https://orcid.org/0009-0001-9254-590X
Victoria Chiamaka Obaro Department of Finance, University of Delta, Agbor, Nigeria https://orcid.org/0009-0009-2715-1574
Cindy N. Odoemene Department of Business Administration (College of Business), Westcliff University, Irvine, California, United States https://orcid.org/0009-0005-0145-1166

DOI:

https://doi.org/10.57159/jcmm.5.3.26608

Keywords:

Petroleum Profit Tax Reforms, Company Income Tax Reforms, Value Added Tax Reforms, Regulatory Quality, Rule of Law, Control of Corruption

Abstract

Despite decades of tax reforms, most African countries, including Nigeria, continue to face tax leakages, weak revenue collection, and economic volatility, with poor regulatory quality, weak rule of law, and high corruption often cited as underlying causes. This study examines how these institutional quality dimensions moderate the effect of tax reforms on economic growth in Nigeria. Using an ex post facto design and annual time series data from 2011 to 2024, it applies robust least squares, moderated regression, and threshold regression to test the linear and non-linear effects of tax reforms, measured by petroleum profit tax reforms (PPTR), company income tax reforms (CITR), and value-added tax reforms (VATR), on Gross Domestic Product per capita (GDPC), with regulatory quality, rule of law, and control of corruption as moderators. The findings indicate that CITR and VATR exert positive but statistically insignificant effects on GDPC, while PPTR has a negative and insignificant effect. Regulatory quality positively moderates the PPTR-growth relationship; rule of law enhances the effectiveness of CITR; and control of corruption positively moderates the VATR-growth relationship. The threshold regression reveals a non-linear pattern in which growth is relatively high at low levels of the corruption interaction, declines at moderate levels, and rebounds at high levels, indicating that anti-corruption measures may slow growth initially but strengthen the long-run impact of VAT reforms. Accordingly, the Nigerian government should prioritize strengthening regulatory frameworks, enforcing the rule of law, curbing illicit accounting practices, and simplifying tax structures, rather than merely introducing successive tax reforms.

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