Multivariate Time Series Analysis of Total Tax Revenue and Its Components

Taxation is a major source of government revenue and an important instrument of fiscal policy for national development. In Nigeria, taxation has existed even before the colonial era and has evolved into a structured system through which government imposes compulsory levies on income, goods, services, and properties of individuals and organizations. Revenue generated from taxes plays a significant role in financing government expenditure, infrastructural development, and the implementation of public programs. Income tax in particular remains a key component of government revenue and influences economic activities within the private sector depending on prevailing fiscal policies. Given the importance of tax revenue, understanding the relationship between total tax revenue and its various components is essential for effective fiscal planning. This study examines the dynamics between total tax revenue and selected revenue components using a multivariate time series modeling approach. The method allows for the analysis of the interactions among multiple revenue variables simultaneously and provides insights into their collective influence on overall tax revenue. The study is expected to contribute to improved revenue forecasting and provide useful information for policymakers and tax authorities in designing effective tax policies and strengthening government revenue generation.