A Conceptual Analysis of Taxation as a Tool for Fiscal Stabilization in Nigeria

Raymond Effiok Thomas *

Temple Gate Polytechnic, Accounting, Aba, Abia State, Nigeria.
 
Review
International Journal of Science and Research Archive, 2023, 10(01), 1285-1291.
Article DOI: 10.30574/ijsra.2023.10.1.0868
Publication history: 
Received on 19 September 2023; revised on 25 October 2023; accepted on 28 October 2023
 
Abstract: 
This paper describes the concept of the Nigeria’s economy and fiscal policy by taxation and integration of recent academic publications until 2023. Previous studies have shown Nigeria’s frequent macroeconomic instability, fiscal deficits, inflation, revenue fluctuations, oil dependency, and all the above factors have created an environment where the design of a tax-based stabilization policy is crucial. Thus, the paper aims to examine the extent to and the ways in which taxation in Nigeria affects fiscal stabilization and to explain how tax legislation have impact on macroeconomic variable and the major obstacles to the legislation's impact in Nigeria. Using the conceptual review method, the study collated and reviewed empirical and theoretical publications during the 2015 to 2023 period and examined fiscal policy theories, tax buoyancy, and public finance stabilization. The study found that taxation contributes to Nigeria’s economy stabilization by affecting aggregate demand, broadening revenue base, and lessening fiscal instability. The researches indicate that revenue resilience and macroeconomic equilibrium are positively impacted by counter-cyclical tax measures, better tax management, and expanding the tax base. But challenges like systemic tax evasion, policy/institutional inconsistencies, administrative inefficiencies, and dependence on unstable oil revenue loosen the grip of tax measures. It ends by acknowledging that taxation, while remaining a tool of fiscal balance, requires considerable structural adjustment to fully function. The modernization of tax administrative systems, diversification of non-oil revenue, compliance automation, and taxation reengineering to achieve long-term fiscal sustainability are the most significant of these structural changes. In Nigeria, the research lays the groundwork for future empirical analysis of taxation and macroeconomic stability.
 
Keywords: 
Taxation; Fiscal; Stabilization; Public Finance; Redistribution
 
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