Empirical analysis of the effect of education tax on human capital development in Nigeria

This study examined the effect of education tax on human capital development both in the short run and in long run in Nigeria. It also investigated the direction of causality Education tax, Petroleum profit tax, company income tax, and Human capital development employing the method of Johansen co-integration and the Granger causality tests using data spanning the period year 2000–2015. Findings revealed that education tax has positive significant impact on human capital development in Nigeria both in the short run (β=.3487991, t = 2.74, P>|t| =0.018) and in the long run (β=.1519196, Z= 3.69, P>|z| =0.018). Also, EDUTAX granger-causes HCDEV. Petroleum profits tax has positive significant impact on human capital development in Nigeria in the short run (β=.0420307, t = 2.70, P>|t| =0.019) but positive insignificant impact in the long run (β=.0510635, Z=-0.57, P>|z| =0.570). In the same vein, PPT granger-causes HCDEV. The study also revealed that company income tax has positive impact on human capital development in the short run (β=0.56107, t = 2.19, P>|t| =0.029) but negative significant impact (β=-.0000116, Z=-3.05, P>|z| =0.002) in the long run. But CIT granger-cause HCDEV. It is now concluded that Education tax has positive significant impact on human capital development both in the short run and in the long run. It is now recommended that government should utilize the education tax funds efficiently and efficiently for better achievement of human capital development in Nigeria. Shortage of infrastructure and inadequate academic personnel, and other social amenities in the school will be provided enormously if education tax fund are effectively utilized in the country.