IMPACT OF FISCAL POLICY ON NIGERIAN ECONOMY WITH RESPECT TO COMPANY INCOME TAX AND DOMESTIC INVESTMENT (1994-2010)

ABSTRACT

This study evaluated the impact of fiscal policy on the economic growth in Nigeria with respect to company income tax and domestic investment from 1994-2010. Effort was made to see how company income tax and value added tax (VAT) influenced the economy. This it was specified that domestic investment is the function of company income tax and value added tax with of regression analysis, it was found that 93.08% of the total variations in the dependent variable (domestic investment) is accounted for by the explanatory variables. This implied that fiscal policy has significant impact on the economy. Thus, to ensure increased investment within the economy, the Nigeria investment promotion decree should be promulgated and repealed.

DEPARTMENT OF ECONOMICS,

FACULTY OF SOCIAL SCIENCES
TABLE OF CONTENTS

Title Page                                                                                                       i

Approval Page                                                                                              ii

Dedication                                                                                                     iii

Acknowledgment                                                                                         iv

Table of Contents                                                                                         v

Abstract                                                                                                         vi

CHAPTER ONE: Introduction

1.1       Background of the Study                                                                1

1.2       Statement of the Problem                                                                3

1.3       Objective of Study                                                                           4

1.4       Hypothesis of the Study                                                                  4

1.5       Significance of the Study                                                                4

1.6       Scope of the Study                                                                           4

1.7       Limitation of the Study                                                                   5

CHAPTER TWO: Literature Review 

2.1       The instrument of the Fiscal Policy                                              8

2.2       Administration of taxation in Nigeria                                           10

2.3       Limitation of Previous Studies                                                      21

CHAPTER THREE: Research Methodology 

3.1       Model Specification                                                                        23

3.2       Model Evaluation                                                                            24

3.3       Source of Data                                                                                  26

CHAPTER FOUR: Presentation and Analysis of Results

4.1       Presentation of Results                                                                   27

4.2       Analysis of Study                                                                             27

4.3       Test of Hypothesis                                                                           29

4.4       Implication of the Study                                                                 29

CHAPTER FIVE:

Summary of Findings, Conclusion and Policy Recommendation

5.1       Summary of Findings                                                                      31

52        Conclusion                                                                                        32

5.3       Recommendation                                                                             32

            Bibliography                                                                                     33

            Appendix I

            Appendix II  

BIBLIOGRAPHY

Ahmed, S. (1986), Temporary and Permanent Government     Spending in an          Economy, Journal of Monetary Economics,     vol. 17

Alesina, A. and Peroth, R. (1999), The Welfare State and         Competitiveness,      National Bureau of Economic Research,       working paper No. 4810.

Byrns T. R. and Stone, W. G. (1992), Economics fifth edition,            New York      Harper Collins Publishers.  

Iyoah A. M. (2004), Macroeconomics. Theory and Policy, Benin,      Mindex          Publishing.   

Jhingan, M. L. (1997), Macroeconomic Theory, India, Vrinda            Publication.

Bartolini, et al (1995), G-7 Fiscal Restructure in the 1990:      Macroeconomic       Effects, Macro-Policy vol. 10 No.20.

Byrns, T. R. and Stone, W. G. (1992), Economics, New York, Harper Collins          Publishers. 

Folster, S. and Henrekson, M. (2001), Growth Effects of          Government Expenditure and Taxation in rich Countries,             European Economic            Review, vol. No.8. 

Gwartney, et al. (1998), The Size and Functions of Government        and      Economic Growth, vol. 20 No.15.

Iyoha, A. M. (2004), Macroeconomics. Theory and Policy,     Benin, Mindex          Publishing.

Jhingan, M. L. (1997), Macro-Economic Theory, India, Vrinda          Publications (P)        Ltd.

 

Mitchell, J. O. (2005), The Impact of Government Spending on          Economic      Growth, Heritage Foundation Backgrounder No.       1831. 

Ndayako, H. (2007), The Impact of Fiscal Policy on the Nigerian       Economy, University of Abuja Publication.

 

Ojo, O. M. (2000), Fiscal and Monetary Policy during Structural       Adjustment Programme in Nigeria, African Economic Research Consortium, CBN Publications.

Onwukwe, N. U. (2003), Fundamentals of Macroeconomics, Abakaliki,       Printwell Press Limited.

Ugwuanyi, U. C. (2004), Basic Principles of Finance, Nsukka,            Great AP Express Publishers Ltd.

www.fmf.gov.ng/fmf-news.aspx…

Koutsoyannis, A. (2997), Theory of economics Second edition,         New York,     Palgrave Publishers.

Nwobuokei P. O. (2001), Foundational of statistics, Enugu, Koruna Books.
 

APPENDIX I

 DATA FOR ANALYSIS

YEAR	INV (N’Million)	CIT (N’Million)	VAT (N’Million)
1994	80948	201911	7260.8
1995	85022	459987	20761
1996	114476	523597	31000
1997	172736	582811	34000
1998	205553	463609	36900
1999	192984	949188	47100
2000	175736	1906.2	58500
2001	268895	2231.6	91800
2002	438115	1731.8	108600
2003	429230	2575.1	136400
2004	455736	3920.5	159500
2005	469320	5547.5	178100
2006	495623	5965.1	221600
2007	473560	5715.6	230800
2008	479501	6246.7	241800
2009	537463	7091.2	265700
2010	562081	7283.7	301400

                                                                                                       

REGRESSION RESULTS

Dependent Variable: LOG(INV)
Method: Least Squares
Date: 05/26/13   Time: 14:23
Sample: 1994 2010
Included observations: 17
Variable	Coefficient	Std. Error	t-Statistic	Prob.
C	6.284634	0.968899	6.486364	0.0000
LOG(CIT)	-0.020509	0.028722	-0.714037	0.4869
LOG(VAT)	0.568745	0.064942	8.757695	0.0000
R-squared	0.930802	Mean dependent var		12.53455
Adjusted R-squared	0.920917	S.D. dependent var		0.667781
S.E. of regression	0.187792	Akaike info criterion		-0.348182
Sum squared resid	0.493720	Schwarz criterion		-0.201144
Log likelihood	5.959548	F-statistic		94.15915
Durbin-Watson stat	1.624501	Prob(F-statistic)		0.000000

 

Dependent Variable: INV
Method: Least Squares
Date: 05/26/13   Time: 15:10
Sample: 1994 2010
Included observations: 17
Variable	Coefficient	Std. Error	t-Statistic	Prob.
C	150029.0	37741.17	3.975208	0.0014
CIT	-0.075639	0.066122	-1.143932	0.2718
VAT	1.534113	0.199321	7.696713	0.0000
R-squared	0.898097	Mean dependent var		331587.0
Adjusted R-squared	0.883540	S.D. dependent var		173028.4
S.E. of regression	59048.12	Akaike info criterion		24.96888
Sum squared resid	4.88E+10	Schwarz criterion		25.11592
Log likelihood	-209.2355	F-statistic		61.69299
Durbin-Watson stat	0.926153	Prob(F-statistic)		0.000000