Effect of Tax Revenue on Road Infrastructure in Ogun State

Despite the critical importance of tax revenue for infrastructure development, many regions struggle to allocate these funds effectively across essential sectors like health, roads, housing, and education. Ogun State, Nigeria, is no exception, facing a pressing need to close infrastructure gaps and enhance public services. This study investigated the impact of tax revenue on road infrastructure development in Ogun State. This study adopted an ex-post facto research design, analyzing secondary data from 2013 to 2023, sourced from the Nigeria Bureau of Statistics, Ogun State Internal Revenue Service, Bureau of Land and Survey, Ministry of Urban and Physical Planning, Ministry of Forestry, and Ministry of Industry, Trade, and Investment. Using the Autoregressive Distributed Lag (ARDL) model, the study examined both the short-run and long-run effects of tax revenue on road infrastructure outcomes with Adjusted R² = 0.869; F-Stat = 8.244; p > 0.05. The analysis reveals that all tax revenue components Pay as You Earn and Direct Assessment (PAYEDA), Property Tax (PT), Withholding Tax (WHT), Road Taxes (RT), Levies (LE), and Other Taxes (OT) exhibit insignificant effects on road infrastructure with Adjusted R² = 0.869; F-Stat = 8.244; p > 0.05 leading to the acceptance of null hypothesis. In conclusion, the study established that tax revenue has no significant influence on road infrastructure in Ogun State. These findings suggested the need for Ogun State to enhance tax administration efficiency and allocation of funds strategically for sustainable development.