Spatial variability of the predictors of government tax revenue in Nigeria

Despite Nigeria being Africa’s largest economy, it has one of the lowest taxes to Gross Domestic Product (GDP) ratios globally estimated at 6 percent. Although tax revenue is generally low among the states in Nigeria, disparities are noticeable in different parts of the country. The understanding of “what” accounts for the variation in tax revenue and “where” are vital for place-based policy intervention to stimulate tax revenue generation. To this end, this study examines how the geographical differences in macro-economic, political economy, socio-economic and geographical location factors in the country explain the spatial variation in tax revenue, and pinpoints where these relationships are significant using the geographically weighted regression. Findings show spatial dispersal in government tax revenue with literacy rate and distance to the coast the two significant predictors. These factors predict more of government tax revenue in the south than the northern part of the country, reinforcing that geographical location and improved socio-economic conditions of the citizens are vital to drive up government revenue. The study recommends the education of taxpayers on the benefits of tax payment in northern Nigeria, while southern Nigeria should continue to take advantage of the coastal economy.