Taxation Potency on Human Capital Development: Verdict from Panel Fixed Effect Model

Abstract

This study examined taxation impact on human capital development in North Central States in Nigeria. The data emanated from the state boards of internal revenue, office of Accountants general, state planning commission of the selected states in North Central Nigeria and the National Bureau of Statistics' document from 2010 to 2020. The selected states are Kwara, Niger, Kogi, Benue, Nasarawa and Plateau states. The study used econometric model to examine how taxes affect growth of human capital development. The numerical estimate of the co-efficient in various equations was obtained using panel data analysis through pooled regression, fixed model, random effect model and Hausman test. The findings showed that personal income tax and value added tax have positive and significant effect on human capital development. Road tax has positive and insignificant effect on human capital development. More so, external loan has positive and significant effect on human capital development in North central states Nigeria. It is concluded that taxation significantly impacted human capital development in north central states, Nigeria. It is recommended that taxation funds should be fully channeled by government into development of human capital properly, and meticulously utilized and managed efficiently to absolutely attain and improve human capital in North central states, Nigeria. Also, government should involve the usage of electronic means for collection of taxes from road users in order to track or drive all the road users into tax net, and to reduce or eradicate road tax evaders so as to enhance revenue drive.