Tax revenue is a veritable source of government revenue. However, it is still debatable in the literature what should be the optimal tax revenue to be imposed to enhance development without unjustly inflicting welfare cost. Economic theories of taxation approach the question of how to minimize the loss of economic welfare through taxation and also discuss how a nation can perform redistribution of wealth in the most efficient manner. Taxation according to Emekekwue (2009) is the collection of a share of individual and organization income and wealth by the government under the authority of the law. The Nigerian tax System has undergone significant changes in recent times. The Tax Laws are being reviewed with the aim of repelling obsolete provisions and simplifying the main ones. Under current Nigerian law, tax revenue is enforced by the 3 tiers of Government, which are Federal, State, and Local Government with each having its sphere clearly spelt out in the Taxes and Levies Act, 1998.

The whole essence of tax revenue is to generate revenue to advance the welfare of the people of a nation with focus on promoting economic growth and development of a country through the provision of basic amenities for improved public services via proper administrative system, and structures (Aboyade, 2010). Taxation is one of the major sources for revenue generation in Nigeria of which petroleum carries the highest percentage of revenue generated in Nigeria. Petroleum taxation policy is both employed as a fiscal policy and as well as income generating tool is widely employed by both developing and developed countries. Since petroleum has been discovered in Nigeria it has been the bedrock of economy and is responsible for about 90% of revenue which is the highest revenue generated by government from taxation. As of 2000, oil and gas export accounted for more than 98% of export earnings and about 83% of federal government revenue, as well as generating more than 14% of its GDP as it provides 95% of foreign exchange earnings, and about 65% of budgetary revenues(central bank of Nigeria; 2015). The role of oil sector towards the process of national development can be seen in the aspect of; employment generation, foreign exchange earnings, income generation, industrialization, and improvement in other economic variables. While the major investors in the petroleum industry are the multinational oil companies, the government regulate the petroleum operations in Nigeria through the petroleum profit tax act (PPTA) of 2007 amended, with its main fiscal instrument as the petroleum profit tax (PPT), through which petroleum revenue accrue to the government. Odusola (2006) notes that the petroleum profit tax is applicable to upstream operation in the oil industry, and its main focus relates to prospecting and exploration lease, royalties, rents, margins and profit sharing elements associated with oil mining. The fundamental objectives of petroleum taxation are to ensure a fair share of accruing from the extraction of the petroleum resource, while also providing sufficient incentives to encourage investment and optimal economic recovery of the hydrocarbon resources. Nwete (2004) opines that the objectives of petroleum taxation includes; achieving government’s objectives of exercising right and control over the public asset, as well as regulating the number of participants in the industry and discouraging its rapid depletion in order to conserve some of it for future generation. Also some economist considers taxation an important tool for maintaining the stability of a country economy.

Tax revenue plays a crucial role in promoting economic activity growth and development. Through tax revenue government ensures that resources are channeled towards important projects in the society, while giving succor to the weak. The role of tax revenue in promoting economic activity and growth may not be felt if poorly administered. This calls for a need for proper examination of the relationship between revenue generated from taxes and the economy, to enable proper policy formulation and strategy towards its efficiency. Adedeji and Oboh, (2012) are of view that the Nigerian economy has remained in a deep slumber with macroeconomic indicators reflecting an economy in dire need of rejuvenation, revival and indeed radical reform. Also in the view of Aguolu, (2008), tax administration needs to be revamped and refunds of taxes as well as duty drawbacks administration are inefficient.

A critical challenge before tax administration in the 21^st century Nigeria is to advance the frontiers of professionalism, accountability and awareness of the general public on the imperatives and benefits of tax revenue in our personal and business lives which include: promoting economic activity; facilitating savings and investment; and generating strategic competitive advantage. If tax administration does not for any reason meet the above challenges, then there is a desperate need for reform in the area of the regime, and in the administration of taxes.

1.2 Statement of the Problem

The impact of the Nigerian tax system on businesses has been a matter of increasing interest and concern to many persons. Tax policies and the structure of taxation in Nigeria is resulting to multiple taxation on businesses, forcing most businesses to run into losses or collapse. Businesses make numerous decisions daily. Their inability to make the right decisions can result in their failure. Since taxation is a liability businesses have to incur, businesses are faced with the option of managing their tax liabilities in such a way their tax burden is reduced. Their inability to effectively manage taxation brings about negative effects on the financing, investment and dividend decisions of the business.

Multiple taxation and high tax rates are challenges facing businesses in Nigeria today. Tax liabilities pose two issues for a business. First each and every tax required of a business is just another business expense. An increase in tax has the same effect as would raise in cost of goods. Ministries, departments, and agencies (MDAs) suffer from limitations in manpower, money, tools, and machineries to meet the ever increasing needs of individual taxpayers. As a matter of fact, the negative attitude of most tax collectors can be linked to poor remuneration and motivation. Also, it has been noted that that staff are not provided with regular training to keep them ahead of developments in tax related matters. This makes the administration of taxes in terms of coverage and assessment very weak. This necessitates the essence of the study on the effect of taxation on economic growth of Nigeria.

1.3 Objectives of the Study

The broad objective of this study is to examine the effect of taxation on economic growth of Nigeria. The specific objectives are as follows:

1. To evaluate the effect of petroleum profit tax on the real gross domestic product of Nigeria.

2. To examine the impact of company income tax on the real gross domestic product of Nigeria.

3. To determine the impact of custom and excise duty on the real gross domestic product of Nigeria.

1.4 Research questions

1. What is the effect of Petroleum profit tax on the real gross domestic product of Nigeria?

2. What is the impact of company income tax to the real gross domestic product of Nigeria?

3. What is the impact of custom and excise duty to the real gross domestic product of Nigeria?

1.5 Research Hypotheses

Hypothesis One

H_O: Petroleum profit tax does not have significant effect on the real gross domestic product of Nigeria.

H_I: Petroleum profit tax has significant effect on the real gross domestic product of Nigeria.

Hypothesis Two

H_O: Company income tax does not have significant effect to the real gross domestic product of Nigeria.

H_I: Company income tax has significant effect to the real gross domestic product of Nigeria.

Hypothesis Three

H_O: Custom and excise duty does not have significant effect to the real gross domestic product of Nigeria.

H_I: Custom and excise duty has significant effect to the real gross domestic product of Nigeria.

1.6 Significance of the study

This research will at a wide range be of benefit to key players engaged in the shaping of the economy. Some of these key players include;

1. Tax Authorities: This research will enable tax authorities give attention to contentious areas in taxation that will enable them to understand how these areas affect the standing of the Nigerian economy.

2. Petroleum Companies: It helps petroleum companies know how they play a vital role in shaping the destiny of the government expenditure of Nigeria’s economy and understand how remitting their taxes can be of great importance to the economy of the nation at large.

3. Students: It gives students a better understanding about petroleum profit tax, company income tax and custom and excise duties, and how it affects the government expenditure of the economy.

4. Researchers: The research work can serve as a foundation or basis for other researchers who are willing to research along the same line. Future researchers can continue from where this research work stops

5. General Public: It helps the society know the role taxation in Shaping of government expenditure in the economy. It also affects their thoughts towards government about the utilization of revenue gotten from petroleum profit tax, company income tax and custom and excise duties.

1.7 Scope of the study

This study on taxation as a tool for economic growth in Nigeria covers the period from 2007 to 2016. The variables included in the study are Petroleum Profit Tax, Company Income Tax and Custom and Excise Duty and gross domestic product. Annual frequency data are used.

1.8 Limitation of the Study

In the process of this research, there are factors as constraints that follow this research work, some of them are: time, and lack of materials.

Time constraint: as a wide topic, it is supposed to cover a number of taxes, company income tax and custom and excise duties but time constraint has been a great hindrance which made researcher to bases this research on petroleum profit taxation. And it has been a difficult task combining lectures, reading and other essential non- academic work, limit the time to carry out this research.

Lack of materials: it is a challenge to the researcher to gather some materials that will be used for the progress of the work, such as articles and journals this is because the researcher was unable to get a well detailed journals base on the research topic from nearby library, therefore leading the researcher to go to many library and online for materials.

Consequently this study is limiting its attention to petroleum profit tax, company income tax and custom and excised duties only within the period 2007-2016.