THE CONTRIBUTION OF TAX REVENUE TO INTERNALLY GENERATED REVENUE IN THE FEDERAL CAPITAL TERRITORY, ABUJA, NIGERIA

Abstract

The study examined the contribution of tax revenue to internally generated revenue (IGR) in Federal Capital Territory (FCT), Abuja, Nigeria from 1995-2020. The study adopted ex-post facto research design. The variables in the model include internally generated revenue as the dependent variable while company income tax (CIT), personal income tax (PIT) and value added tax (VAT) were captured in the model as the explanatory variables. The method adopted for the study was Autoregressive Distributed Lag (ARDL) models. Findings from the unit root test show that IGR, CIT and VAT were stationary at first difference while PIT was stationary at level. The Cointegration test result from the ARDL bound test shows that the variables are co-integrated, which implies that the time series variables considered have long-run equilibrium relationship. Findings from the ARDL regression result shows that the coefficients of CIT and VAT have negative relationship with IGR in FCT, Abuja while the coefficient of PIT has positive relationship with IGR in FCT, Abuja. Findings also show that effects of CIT, PIT and VAT on IGR in FCT, Abuja were statistically insignificant. The study recommends among others that there should be accountability and transparency from government officials on the management of revenue derived from the various components of taxation particularly CIT, PIT and VAT that directly concerns individuals in the society.