Effect of Education Tax on Human Capital Development in Nigeria

This study examines the effect of the Education Tax levied on assessable profits of registered companies in Nigeria on human capital development outcomes at the national level. The Education Tax Fund, now administered through the Tertiary Education Trust Fund (TETFund), is mandated to channel corporate tax contributions into improving tertiary educational infrastructure and academic capacity. Despite over two decades of operation, the efficiency of this fiscal instrument in generating visible improvements in Nigerian universities, polytechnics, and colleges of education remains a subject of public debate. Using an ex-post facto design, the study analyses data on education tax receipts, TETFund disbursements, and tertiary education outcome indicators including student-to-staff ratios, laboratory facilities, and library resources, sourced from the National Universities Commission and TETFund annual reports spanning seven years. Correlation and regression analysis are employed. The study anticipates finding a positive but modest relationship between education tax revenue growth and institutional capacity improvements, moderated by procurement inefficiencies and project implementation delays. It further finds that a significant share of TETFund projects experience cost overruns and incomplete delivery timelines. Recommendations include strengthening TETFund procurement oversight, establishing institutional accountability for project completion, and exploring the possibility of increasing the education tax rate proportional to demonstrated fund utilisation efficiency. Keywords: education tax, TETFund, human capital, tertiary education, fiscal policy.