Impact of Tax Reforms on Revenue Generation in Lagos State: A Time Series Approach

Abstract

This study assessed the impact of tax reforms on revenue generation in Lagos State of Nigeria using Time Series quarterly data between the period of 1999 and 2012, obtained from the records of Tax Payer Statistics and the Revenue Status Report of Lagos State Internal Revenue Service (LIRS). Data collected were analysed using ordinary least square regression techniques (OLS). The study showed that Lagos State captured more people into the tax net as there was a continuous increase in taxpayers’ cumulative growth (more than 20% each year); and found that the primary source of revenue generation in Lagos State was the internally generated revenue (IGR) in which tax revenue constituted about 80%. The result also showed that, on trend, between 1999 and 2005, there was no noticeable increase in revenue generated from tax; but from 2006, there was a sharp, steady and noticeable increase in the tax revenue generated. On the pattern of tax administration in the state, from 2006 the state concentrated more on tax reforms with less dependence on other sources of internal revenue generation. The result further revealed that there was a long run relationship between the tax reforms and revenue generated in Lagos State; thus, the tax reforms had positive and significant effect on the revenue structure of the State. The study concluded that tax reforms had significantly contributed to revenue generation in Lagos State, which had enabled the state to carry her responsibilities to the citizenry with less reliance on the Federal Government.

Keywords: Tax reforms, internally generated revenue, Time Series Analysis, Lagos