IMPACT OF TAX REVENUE ON EXTERNAL PUBLIC DEBT IN NIGERIA (1998-2021).

Abstract

The study examined the impact of tax revenue on external public debt in Nigeria. The specific objectives were to evaluate the impact of petroleum profit tax, company income tax, custom and excise duty and valueadded tax on external public debt in Nigeria. Secondary data were obtained from Central Bank of Nigeria (CBN) and Federal Inland Revenue Service annual reports and accounts for the period of 23 years (1998-2021). The study made use of descriptive statistics so as to determine the characteristics of the modelvariables; while Ordinary Least Square (OLS) multiple regression was used to estimate the impact of the independent variables on external public debt in Nigeria at 0.05 level of significance. Resultsof the OLS regression analysis showed that Petroleum Profit Tax (PPT); Company Income Tax (CIT);Custom andExcise Duty (CED) had negative and significant impact on external public debt. However, the study alsodiscovered that value added tax had negative and no significant impact on external public debt in Nigeria.The overall implication of these findings is that tax revenue has contributed in reducing external public debt in Nigeria. In line with this, the study concluded that tax revenue had influenced the Nigeria’s foreign debt for the period covered by the period. The study therefore, recommended that government can use tax revenues to pay public debt directly rather than investing it in unnecessary and poorly planned projects with no profit.