Progressive Tax Reform and Macroeconomic Performance: A Comparative Assessment of Nigeria’s 2026 Tax Regime with South Africa, the United Kingdom and Canada (2000-2035)

This study examines the macroeconomic implications of Nigeria’s 2026 progressive tax reform within a comparative panel of South Africa, the United Kingdom, and Canada, covering 2000–2035. Employing two-way fixed effects, panel ARDL, two-step system GMM with valid instruments confirmed by the Hansen J-test, threshold regression, and a machine-learning T-learner model, the analysis assesses how tax-to-GDP ratio, direct tax share, and institutional quality shape real GDP per capita growth. The results consistently show that higher tax effort and greater reliance on direct taxation significantly enhance long-run growth, with stronger marginal effects observed in higher-capacity fiscal regimes. The T-learner reveals important heterogeneities: the United Kingdom and Canada exhibit the largest positive treatment effects (≈ 0.90), South Africa records a moderate gain (≈ 0.42), while Nigeria shows weaker short-run effects ( ≈ − 0.66), reflecting transitional constraints and institutional gaps. The threshold model further detects non-linear tax effects, indicating that economies operating above certain tax-effort levels generate greater growth dividends. Overall, the findings demonstrate that progressive and well-administered taxation, anchored in strong institutions and adequate investment, remains essential for enhancing Nigeria’s growth trajectory and for narrowing performance gaps with comparator economies as it transitions into its 2026 fiscal reform regime.