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Taxation And Economic Growth

Taxation and Economic Growth


Economic Growth remains a MACRO-ECONOMIC objective of any nation, be it developed or developing alike. Economic growth serves as an increase in the capacity of an economy to produce goods and services, compared from one period of time to another. Governments are saddled with responsibility of providing some basic infrastructure for the citizens, stabilization of the economy, redistribution of income, provision of economic services are some major responsibilities a government owes its citizenry. The ability of government to live up to these responsibilities largely depends on the amount of revenue generated by the government through the various sources (internal and external) available to it. One of such sources is TAXATION.

Taxation being an important fiscal policy instrument at the disposal of government to mobilize revenue and promote economic growth development. Taxation is a mechanism through which the government seeks to realize some of its economic objectives. Taxation can be used to influence or direct the consumption pattern of citizens. It can be used to encourage or discourage investment in certain sectors of the economy. In this, the government can significantly reduce the number of ‘harmful and antisocial’ but not illegal economic activities. It can also be used to protect local and small businesses and reposition them to better compete with their bigger, foreign counterparts.


….Taxation ând Economic Growth