Impact of Trade Openness on Tax Revenue in Nigeria

Abstract

Following recent financial shocks and turbulence, many economies, including developing ones, have reviewed their fiscal policies in an effort to draw foreign direct investment, boost their revenue generation, and enhance the economic and sociocultural well-being of their citizens. In this study, during the ten-year period (2011–2021), the effect of trade openness on tax revenue collection in Nigeria is evaluated. It was discovered that trade openness had significant effects on tax revenue performance. The analysis was done using descriptive statistics, multiple regression, and data for the time under examination. To estimate the ratio of Trade openness, multiple regressions was also combined with OLS. According to the findings, nations with high export to GDP ratios typically generate more tax revenue than those with restricted trade. Therefore, it is necessary for the government to support export-based activity, most likely non-oil such as agriculture, and to ensure that all business-friendly legislation is in place.

Keywords: Taxation, Trade openness, Nigeria, Export, and Import

JEL Code: F18, F41, H21

Orcid Number: 0000-0002-2117-3387

DOI: 10.7176/JESD/14-14-01

Publication date:August 31^st 2023