THE IMPACT OF TAX INCENTIVES ON ECONOMIC AND INDUSTRIAL DEVELOPMENT

This study examined the effect of tax incentives on economic growth in Nigeria from the period 1980 2022. In achieving the objective of this study, the researchers employed econometrics method to analyzed data. The empirical result reveals that there is positive and significant relationship between annual allowance and gross domestic product at all levels of significance. This means an increase in annual allowance affects gross domestic product positively. There is a positive and significant relationship between investment allowance and gross domestic product. This means an increase in investment allowance affect gross domestic product positively. From the foregoing analysis and findings, we can derive empirical conclusions with respect to effect of tax incentives on economic growth in Nigeria. Tax incentive is a deliberate reduction in or total elimination of tax liability granted by the government in order to encourage a particular economic unit to act in some desirable ways. The desirable ways maybe to invest more, employ more, export more, sell more, consume less, import less and pollute less and so on. Empirical studies like those of (Sanni, 2002) and (Adedotun 1996) have reported different views on tax incentives as a catalyst for economic growth and development. Taxation has been used to encourage savings, investment and redistribute income. Also, priority sectors like Export Processing Zone (EPZ), solid minerals; oil and gas have been encouraged. The manufacturing sectors have received the right doses of tax incentives. Government also uses taxation to stimulate the economy by using tax policy to influence purchasing power and production costs. Countries have introduced investment incentives for varying reasons; in some case, the incentives may be seen as a counterweight to the investment disincentives inherent in the general tax system. Keywords: Tax incentive, Economic growth, Ordinary least square (OLS)