Uzoma Chidoka Nnamaka, Ph.D

Rivers State Universal Basic Education Board, Port Harcourt, Nigeria

Nwanyanwu, Kingdom Uchenna

Department of Accounting, Faculty of Business Studies, Ignatius Ajuru University of Education, Port Harcourt, Nigeria


This study empirically examined the effects of taxation on income inequality in Nigeria for a 40-year time period, from 1980 to 2019. The specific objectives were to determine how value added tax, personal income tax, company income tax and custom duty affects income distribution measured by Gini index. Time series data on the underlying tax indicators was sourced from the Central Bank of Nigeria (CBN) statistical bulletin and Federal Inland Revenue. The study adopted the Ordinary Least Square technique. The test for unit root was carried out using the Augmented Dickey-Fuller (ADF) test for stationarity and the result showed that all the variables used in the study were stationary at first difference.  The Johansen cointegration test result showed that the variables in the model have long run relationship. It was further revealed that value added tax and company income tax intensified income inequality in Nigeria for the period covered by the study. Personal income tax and custom duty on the contrary played a significant role in reducing income inequality in Nigeria within the period reviewed. Going by the findings from the study, it is recommended that government, through the tax authority, should put systems in check to tackle tax evasion by companies. Also, for taxation to serve the purpose of redistribution of income to bridge the wide gap between the rich and the poor, the Nigerian government should implement tax structures that are purely progressive.

Keywords: Taxation, Income inequality, Gini index, Error Correction Mechanism.


Nnamaka, U.C & Nwanyanwu, K.U (2022). Investigating Taxation and Income Inequality in Nigeria. African Journal of Business and Economic Development, 2 (1), pp49-60. Available online at: p211.pdf.

View Previous Issues | Archive πŸ”™Back to Journal Home Page Submit Paper



Call for papers

Research Articles written in English Language are invited from interested researchers in the academic community and other establishments for publication. Authors who wish to submit manuscripts should ensure that the manuscripts have not been submitted elsewhere neither is it under consideration in another journal. The articles should be the original work of the authors. High quality theoretical and empirical original research papers, case studies, review papers, literature reviews, book reviews, conceptual framework, analytical and simulation models, technical note from researchers, academicians, professional, practitioners and students from all over the world are welcomed.


IJAAR (DOI: 10.46654)Β is a voting member of CROSSREF.

Authors who haven’t submitted their addresses for hard copies collection are advised to do so by visiting:



Verified by MonsterInsights