Taxation and Manufacturing Sector Output in Nigeria

Etim Osim Etim, Mbobo Erasmus Mbobo, Ihenyen Confidence Joel and David Johnny Ekanem
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Etim Osim Etim: Department of Accounting, Faculty of Business Administration, University of Uyo, Nigeria
Mbobo Erasmus Mbobo: Department of Accounting, Faculty of Business Administration, University of Uyo, Nigeria
Ihenyen Confidence Joel: Department of Accounting and Finance, Faculty of Management and Social Sciences, Niger-Delta University, Bayalsa State, Nigeria
David Johnny Ekanem: Department of Accounting and Finance, Faculty of Social and Management Sciences, Ritman University, Ikot Ekpene, Nigeria

International Journal of Research and Innovation in Social Science, 2020, vol. 4, issue 7, 240-249

Abstract: The study investigated the relationship between taxation and manufacturing output in Nigeria from 1985 to 2018. This is premise on the argument taxation causes disincentive to investment and entrepreneurship. Data were gathered from the published reports of the Central Bank of Nigeria, Federal Inland Revenue Service and National Bureau of Statistics covering the period of the study; ex-post facto research design was adopted. Collected data on manufacturing output, companies’ income tax, personal income tax, value added tax and petroleum profit tax were analysed using ordinary least square technique. The results show the t-statistics (CIT = -0.9025, PIT = 3.4047; VAT = -0.2090; PPT = 1.9113) and p-values (CIT = 0.3775; PIT = 0.0028; VAT = 0.8366; PPT = 0.0701) implying CIT and VAT not statistically significant while PIT and PPT were statistically significant with positive relationship with manufacturing out affirming the theoretical conception that companies’ income tax discourage entrepreneurship. Taking the model as a whole, it was concluded that there is a significant relationship between the variables of study. It was recommended that government should grant more tax incentives to manufacturing sector operators and reform of the tax administrative system.

Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:bcp:journl:v:4:y:2020:i:7:p:240-249

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