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to ensure increased investment within the economy, the Nigeria investment promotion decree should be promulgated and repealed.



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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
                                                                                                       
    SOURCE: CBN STATISTICAL BULLETIN, VOLUME 20, 2009

APPENDIX II
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


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