TAX REFORMS, DIGITALISATION AND GOVERNMENT REVENUE IN NIGERIA

Mobilisation of tax revenue has become a critical policy objective for the public sector in Nigeria. The influence of tax reforms and digitalisation on government revenue in Nigeria was investigated in this study. This research focused on evaluating the distributional outcomes of tax revenue and digitalisation on the revenues of both Federal and State government. The study used a time series-based research approach with both descriptive and inferential analysis of the hypothesised relationships. The Autoregressive Distributed Lag (ARDL) technique was used to create a dynamic framework for analysing the linkages in the study. Disaggregated data on government revenues was employed in the empirical analysis due to differentials in revenue stream. The long and short run impacts of tax reforms (for Company Income Tax – CIT and Value added tax – VAT) and digitalisation on government revenues were calculated using the analytical framework. The study's findings suggest that both CIT and VAT amendments increased revenue of the federal government in the short and long run. The reforms, on the other hand, hampered state government earnings in Nigeria, particularly in the long run. Furthermore, there is evidence that, in the short and long run, digitalisation has a considerable beneficial influence on Federal-based revenue but a negative impact on State-based revenue. In the long run, digitalisation improved the impact of tax reforms on federal government revenues, however, the impact on state government revenues was not obvious in the study. The results imply that the current VAT reforms in Nigeria seem to undermine the state government's fiscal system and focus more on federal revenue activities, although the CIT reforms appear to be more widespread in terms of their effect on short-term revenue inflows. In the same vein, there are implications that tax reforms that are more streamlined with the transformation of the economy (in terms of digitalisation) will yield better revenue outcomes in Nigeria. It is therefore recommended that the conduct of fiscal reforms in Nigeria should evolve to become more of a bottom-top approach where all tiers of government are carried along at all times. Moreover, state governments need to improve their capacity to obtain better revenue input from the digital economy in Nigeria by playing more active roles in provision and monitoring of the digital economy