Productivity of the Nigerian Tax System (1994 - 2013)

With the recent fall in the price of crude oil below the budget benchmark Government rely more on tax to finance the budget. This paper therefore examines the productivity of the Nigeria tax system using a time series data of 20 years. All the data for the analysis was collected from central bank statistical bulletin and federal inland revenue service annual report of various years. The data was decomposed. The study uses tax elasticity and buoyancy approach. Regression in Minitab statistical soft-ware was use to analyzed the data. The study finds a linear relationship between tax base and tax revenue. The analysis also reveals that there is a significant positive relationship between tax policy and tax base and a weak relationship between tax revenue and economic growth. The study therefore recommended among others that the Government should switch more from direct tax to indirect tax which is less distortionary and has fewer burdens on the tax base.