The Neutrality or Variability of the Nigerian Tax System to Comparative Econometric Models and Economic Growth

Abstract

This study is set to compare the output of three econometric models – Linear, Log Quadratic and Transcendental Logarithm (Translog) – to evaluate the relationship between tax system and economic growth using the gross domestic product (GDP) as a proxy. The neutrality (the extent to which tax system is indifference to) or variability (the extent to which tax system is inconsistent with) the outputs of the three comparative econometric models used in evaluating the relationship between Nigeria tax system and GDP, is the main thrust of the paper. Findings revealed that the output from the Linear and the Translog models were similar, but the output from Log Quadratic model was different. The choice of an econometric model in evaluating relationship should be carefully decided rather than being arbitrary. It is recommended that two or more mdels may be used, were appropriate, to evaluate the relationship between variables. One of the criteria for selecting appropriate model is a pre- graphical representation of the relationships between  the variables.

Keywords: Neutrality, Variability, Nigerian tax system, Comparative econometric models, Economic growth.