THE INTERNATIONAL JOURNAL OF BUSINESS & MANAGEMENT ISSN 2321–8916 www.theijbm.com 23 Vol 7 Issue 4 DOI No.: 10.24940/theijbm/2019/v7/i4/ BM1904-009 April , 2019 THE I NTERNATI ONAL JOURNAL OF BUSI NESS & MANAGEMENT Determinants of Tax Revenue: A Case of Nigeria 1. Introduction Taxation started in 20 century ago as crucial element to state building with revenue creation, redistribution of income, restriction of social ills by means of re-pricing of some goods and services such as tobacco and alcohol and, representation, which is the realm of democratic state building and the very need for revenues (Owens, 2015). The evolution of taxation over a period creates the nexus between taxation and government services in general. There will not be any upheaval as long as there are commensurate government services to the taxpayers with the level of taxes (Ross, 2004). In a virile economy that is reliant on taxation, the state is focused on improving its tax system to get more tax revenue (Gupta, 2007). Taxation is a critical component in the development of middle- and low-income nations (Russell, 2010). The generation of revenue in a country largely relies on its capacity to expand the tax both in an economic and administrative term. The existence of a gap between what is collected and what is expected to be received by law because of the shortcomings on the part of tax administrators depicts the need for reform in tax administration (Kebede & Tegegn, 2016). It seems that tax revenue generated by developing countries is meager due to some institutional challenges such as corruption and weak administration, policies and laws of the tax system. It is believed that reforms of the tax administration and tax system are germane to improving the quantum of tax revenue generation in the developing countries coupled with political stability (Ajaz & Ahmad, 2010). Therefore, the primary determinant of tax collection in both developing and developed countries is institutional quality as institution problems are regarded in developing countries as the main reason for abysmal tax collection (Ghura, 1998). Several reforms have been carried out in the country's tax system to improve the tax revenue of the state but yielded little effect. 1.1. Resear ch Pr oblem Nigeria’s economy is challenged mainly on the need for diversification of its revenue from oil earnings base. The diversification is more important now than ever having realized that dependence on oil revenue can no longer sustain the finance of public expenditure (Dickson & Rolle, 2014). The decline in the price of oil in the global market and the reduction Ishola Rufus Akintoye Lecturer, Department of Accounting, Babcock University, Nigeria Dr. Festus Fola Adegbie Head, Department of Accounting, Babcock University, Nigeria Niyi Solomon Awotomilusi Ph.D. Student, Department of Accounting,Babcock University, Nigeria Abstract : Taxation is enforced payment from individuals, groups, and institutions to the government. Tax is one of the sources of revenue generation of any government to enable it to meet the need of the citizens. Several studies were carried out on the determinants of tax revenue in developing nations using panel data analysis without specific effect, but it seems not many were conducted in isolation in Nigeria. The study evaluated the influence of political stability and absence of violence as institutional factor jointly with economic factors which are industry share in GDP, the share of Agriculture in GDP, trade openness and inflation held as control variables on tax revenue in Nigeria. The ex-postfacto research design was used for this study. The geographical coverage of the study is Nigeria. Using purposive sampling technique, secondary data were extracted from the reports of Central Bank of Nigeria statistical bulletin, 2018, and Political Risk Services International Country Risk Guide and the World Bank Development Index for a period covering 1984-2017. The study adopted descriptive and inferential (regression) statistics for data analysis. We checked for stationarity of all variables by Augmented Dickey-Fuller (ADF) and applied Autoregressive Distributed Lagged (ARDL) to estimate the short run and long run dynamics of the models. The study revealed a significant relationship between Political Stability and absence of Violence/ terrorism and tax revenue (β = 0.0457; p< 0.05; t(34) = 2.92; R 2 = 0.99) which align with a priori expectation. There were insignificant positive relationships with control variables which may be due to subsistence farming, a large number of small-scale enterprises that evades tax, trade restriction and nonpayment of personal income tax by a larger informal sector. The researcher recommended that government should improve on political stability and absence of violence/ terrorism to improve tax revenue through voluntary compliance to tax laws Keywords: Political Stability, Tax Revenue, Institutional factors, Economic factors, Nigeria