The Effect of Tax Revenue and Statutory Spread on Fiscal Sustainability of All States in Nigeria

It was better to understand that fiscal sustainability was government’s creative ability to finance its activities and finance its outstanding debt without increasing debt levels. One major components of the state revenue was derived from the appropriation of taxes that was compulsorily contributions levied on individuals or corporations by the state government. The necessity for taxation emanateds from the need for government to provide for financial sustainability within its system. Now the tax to GDP ratio had remained very very low. The objective of the study was to examine the effect of Non-PAYE tax revenue on Fiscal sustainability of all states in Nigeria. Data were collected through secondary sources obtained from the Public Finance Database of the Nigeria Governors Forum (NGF), annual fiscal reports published by the Central Bank of Nigeria (CBN), Joint Tax revenue generation through taxation and allocations received from the federation account. The data were analysed using the panel regression technique. Finding revealed that Non-PAYE tax revenue had no significant effect on the fiscal sustainability of states in Nigeria. In conclusion, the potential challenges in the collection and management of other forms of taxation, such as taxes on goods and services, property taxes, or business taxes might be the reason for such a situation. Recommended was that tax management and collection strategy for other forms of tax be modified to enhance the input.