Taxation and Income Inequality in Nigeria: A Distributional Analysis Using Administrative and Survey Data

This doctoral study conducts a comprehensive distributional analysis of Nigeria's tax system, examining its redistributive capacity and contribution to income inequality outcomes using the most granular combination of administrative tax data and household survey data assembled for Nigeria to date. Nigeria exhibits one of Africa's highest income inequality levels, yet the redistributive performance of its tax system has not been rigorously quantified at the top-income level due to data limitations. The study combines FIRS personal income tax records for the top decile of formal sector earners, anonymised by agreement under a data access protocol, with Nigeria Living Standards Survey data covering the remaining income distribution. The combined dataset enables construction of pre-tax and post-tax income Gini coefficients and Kakwani progressivity indices by tax type, covering personal income tax, VAT, corporate tax, and informal sector levies. The analysis uses a micro-simulation framework to estimate the distributional effects of alternative tax reform scenarios including a VAT exemption expansion, a top personal income tax rate increase, and a wealth tax introduction. The study expects to find that Nigeria's overall tax system is approximately distributionally neutral, with the regressive VAT component broadly offsetting the progressive personal income tax component, and that tax revenues finance insufficient social transfers to meaningfully reduce post-fiscal inequality. Original contributions include the first top-income-administrative-data distributional analysis of Nigeria's tax system. Keywords: income inequality, tax redistribution, distributional analysis, Kakwani index, Nigeria.