Taxation And Economic Growth In Nigeria: An Empirical Analysis

Taxation And Economic Growth In Nigeria: An Empirical Analysis

Chapter One

Preface

Background To The Study

One of the most generally bandied issues in economics is on how levies as means of financial policy at stabilizing the general frugality relate to profitable growth of developing countries similar as Nigeria. A lot of studies have tend to yield an followership of the relationship between taxation and profitable. Some of the studies have rather yielded results that have established negative goods of levies on profitable growth. levies as means of financial policy raises the cost or lower the return to the tested exertion( Juliana, Mustaffa and Zulkifli, 2012).

Income levies produce a counterincentive to earning taxable income. individualities and establishment have an incitement to engage in conditioning that minimize their duty burden. As they substitute conditioning that are levies at a cover rate for conditioning tested at a advanced rate, individualities and enterprises will engage in lower productive exertion, leading to lower rates of profitable growth( Juliana Mustaffa and Zlukifli, 2012).

profitable growth is the base of raised substance. Investments in new capital similar as( mortal and physical) the perpetration of new product ways and the preface of new products are the fundamentals of the growth process. Though its effect on the return to investment or the anticipated profitability of exploration and development, taxation can affect what choices are made and eventually the rate of growth. Taxation is necessary simply because it would neither be doable nor desirable to finance government solely by charges on services( Mwima- Swaya, 1995).

principally, taxation refers to a system used by the government through levying assessments to gain plutocrat from people, diligence and associations. It isn’t only fairly consummate but also mandatory and doesn’t guarantee a direct relationship between the quantum contributed by a citizen and the extent of government services handed to him her. A duty is an involuntary figure paid by individualities or business to the government for the sole purpose of answering coffers to society and economically salutary use, to stabilize the frugality and to redistribute wealth between the rich and the poor( Mwima- Swaya, 1995).

also, the relationship between taxation and profitable growth has of recent times come one of the most important profitable issues. This is particularly due to the poor financial performance in a number of developing countries similar as Nigeria. The relationship to a large extent empirical and forces one to employ styles of scientific disquisition that don’t yield aprioristic conclusions and external trueness, but only statements of validity limited by the character of the model used or by significance of substantiation handed( Dalibor, 2005).

While it could be clear that taxation might affect the position of GDP, Early growth models presumed that the langram growth depends on exogenons specialized change similar that it may be hard to pierce the effect of financial policy on the rate of capital accumulation or further generally, profitable exertion( Myles, 2000). Some previous studies established a positive relation between taxation and profitable growth; others have still submitted mixed findings.

It’s against this background, this study is under taken to estimate the impact of taxation on the profitable growth of Nigeria with specific attention on direct taxation similar as PPT, CIT and Tax

Statement Of The Exploration Problem

The achievement of Macro Economic ideal of full employment, stability of price position, high and sustainable profitable growth from time immemorial has been a policy precedence of every frugality similar as Nigeria given the vulnerability variables to oscillations in the frugality. The achievement of this veritably thing is told by the employment of financial policy instrument similar as taxation. A lot of earnings deduced by the Nigerian government through taxation has not yielded profitable growth and full employment stability( Chigbu, Akujuobi and Ebunohowei, 2002).

In the light of the below being gaps, the following specific exploration questions are raised

Does petroleum profit duty enhance the profitable growth of Nigeria?

What’s the relationship between profitable growth and the company income duty in Nigeria?

Is there a relationship between value added duty and the growth of the Nigeria frugality?

What’s the relationship between particular income duty and profitable growth?

Objects Of The Study

The general ideal is to examine the impact of taxation on the growth of the Nigerian frugality. But the specific objects are as follows

To examine how petroleum profit duty contribute to the profitable growth of Nigeria.

To find out the relationship between company income duty and the Nigerian profitable growth.

To ascertain if there’s a significant direct relationship between value added duty and the profitable growth of Nigeria.

To ascertain the relationship between company income duty and profitable growth.

Exploration Suppositions

The exploration suppositions to establish the relationship between taxation and the profitable growth of Nigeria are put in an indispensable form as follows

Ho No significant relationship between petroleum profit duty and profitable growth.

Ho No significant relationship between company income duty and profitable growth.

Ho No significant relationship between value added duty and profitable growth.

Ho No significant relationship between particular income duty and profitable growth.

Compass Of The Study

This study examined the impact of taxation on the profitable growth of Nigeria. This study covers the time between 1995- 2011. In terms of the samples size, similar levies as petroleum profit duty, company income duty, value added duty and particular income duty are critically examined under this study within the Nigeria frugality with a geographical bias or restriction.

Significance Of The Study

Experimenters on the impact of profit from taxation collected by the Nigerian government in the frugality have been on going. In this regard, it’s necessary to state the utility of this study in light of the present day Nigerian frugality.

originally, the Federal Government of Nigeria will find this study useful in terms of policy expression especially fiscally policy to help achieve stability of the frugality. It’ll further guide them to know the extents with which these varying forms of duty profit have contributed to the profitable growth of Nigeria and how to sustain it.

Limitations Of The Study

There are still skimp literature reviews on the impact of taxation over the Nigerian frugality. utmost of the study done therefore far on taxation and profitable growth has substantially been peculiar to advanced countries of the world.

Data serve as another limitation of the study. utmost times, the delicacy and trustability of the data uprooted from the secondary source are unreliable, similar that the outgrowth of this study might be veritably valid and the problem of generalizing the outgrowth of the study.