Journal of Tax Reform
Tax revenue collection or foreign borrowing: what fiscal tools enhance the educational development in Nigeria?
C.O. Omodero
Department of Accounting, College of Management and Social Sciences, Covenant University Ota, Ogun State, Nigeria
Abstract
Nigeria’s educational system does not receive sufficient finances and nearly every new administration proposes greater levels of borrowing on the belief that they would enhance the economy, particularly human capital. The most important fiscal tools utilized in the Nigerian political arena to support education are tax revenue collection, foreign borrowing, and its interest component. This study aims to examine the impact of these fiscal tools on educational development in Nigeria. We use the multiple regression analysis of the data obtained from the Central Bank of Nigeria, Federal Inland Revenue Service, and World Bank Economic Development Indicators. The statistics ranging from 1990 to 2019 were analyzed using the Statistical Package for Social Sciences (SPSS). The correlation data shows that education has a substantial positive association with foreign liabilities and taxation income at the 1% level, but the relationship with debt servicing (interest rate) is negatively significant at the 1% level. Foreign debt, on the other hand, shows a substantial positive association with education and tax income at the 1% level but has an insignificant negative correlation with interest rate. Tax income has a substantial negative association with interest rates, but it also has a positive relationship with education and foreign loans. The findings of this study show that foreign debt and interest rates have had little impact on Nigeria’s educational system. The study result met the a priori expectation that tax revenue should impact positively on the development of education in Nigeria. As a result, the research recommends the prudent use of tax revenues while opposing foreign borrowing for political campaigns.
Keywords
fiscal tools, taxation, foreign borrowings, interest rate, education, Nigeria, political campaigns
JEL classification
D72, D82, E62, F34, G12References
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Acknowledgements
The author wishes to express her heartfelt appreciation to the independent reviewers and editors of the Journal of Tax Reform for their invaluable contributions to the development of this work through constructive criticism and review remarks.
About Authors
Cordelia O. Omodero – PhD, ACA, Lecturer of Department of Accounting, College of Management and Social Sciences, Covenant University Ota, Ogun State, Nigeria (Km. 10 Idiroko Road, Canaan Land, Ota, Ogun State, Nigeria), ORCID: 0000-0002-8758-9756; e-mail: onyinyechi.omodero@covenantuniversity.edu.ng
For citation
Omodero C.O. Tax revenue collection or foreign borrowing: what fiscal tools enhance the educational development in Nigeria? Journal of Tax Reform. 2021;7(3):231–243. doi.org/10.15826/jtr.2021.7.3.100
Article info
Received September 1, 2021; Revised October 18, 2021; Accepted November 18, 2021
DOI: https://doi.org/10.15826/jtr.2021.7.3.100
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