Direct Taxes and Income Redistribution in Nigeria

Introduction- Income redistribution is central to the development of any nation. However, the issue of generating incomeand its redistribution in Nigeria has been challenging overtime, with the nation depending largely on oil with littleconsideration on other sources of income. Also, insufficient tax resources, tax collectors' illicit activities and a lack ofawareness of the value of paying tax by taxpayers are some of the problems facing the country in terms of tax revenuegeneration.Objective - Our study therefore investigated the impact of direct taxes on income redistribution in the context of Nigeria,using company income tax, personal income tax, petroleum profit tax and education tax as direct tax variables.Methodology –The study covered the period 1990 to 2019 using annualized data set from Federal Inland RevenueService (FIRS) and Central Bank of Nigeria Statistical Bulletin. The study employed the Fully Modified Least Squares(FMOLS) to analyze the data.Research Findings– Empirical results of our study revealed that, company income tax and education tax hadinsignificant negative effects on income redistribution, while personal income tax and petroleum profit tax hadsignificant positive effects on income redistribution, thus reducing income inequality in the context of Nigeria.Recommendations – We thus recommended “inter alia” that, revenue generated from taxes should be effectively usedby government in providing quality infrastructures like schools, railway, healthcare facilities and other business outfitsacross various states for the general wellbeing of the citizens as this is hoped to close the income distribution gapbetween the rich and the less privileged in the country.Type of Paper: Empirical