TAX COMPONENTS AND ITS EFFECTS ON INDUSTRIAL OUTPUT IN NIGERIA

Abstract

Taxation is a major component of the fiscal policy framework of any nation with a key objective for stabilization of the economy and increasing national output to grow and expand industrial output in Nigeria. The paper's objective is to analyze the effects of tax components on industrial output in Nigeria using historical data sourced from the Central Bank of Nigeria Statistical Bulletin (CBN), National Bureau of Statistics (NBS), and Federal Inland Revenue (FIRS) spanning from 1999-2022. The paper adopted Fully modified ordinary Least Square Method of analysis. The findings highlight the varying effects of tax components on industrial output in Nigeria, company income tax showing positive but insignificant relationship, Customs & Excise Duties exerting a negative impact on industrial output with VAT positively influencing industrial output,. The paper suggests that policymakers should focus on optimizing VAT policies. Also including improving tax collection mechanisms, streamlining procedures, and ensuring compliance, policymakers should review and evaluate the existing tax policies, review duty rates and trade policies by Lowering duties, particularly on essential inputs and machinery, and creating favourable trade conditions that can help mitigate the adverse effects of these duties on industrial output.