Taxation and Tax policy as government strategy tools for Economic development in Nigeria

Abstract

Taxation, besides its revenue generation capacity, can also be used as a fiscal policy tool to shape the economy. Considering that the Nigerian tax laws have witnessed significant changes over the period, it becomes imperative to assess the performance of such policies through its effect on the economy. The research therefore examines the various tax incentives currently available in the different tax laws, evaluates how taxation and tax policies have affected the economy of Nigeria and the effectiveness of taxation as a government strategy tool for the Nigerian economic development, using time series data of taxation and economic development of the period 1960 to 2007. From correlation, time series and multivariable regression analyses of relationships among variables, the research found out that taxation and tax policies make positive contributions to economicdevelopment. The Nigerian government is advised to improve the provision of social infrastructures because availability and maintenance of public goods are popular ways tax payers conventionally assess the justification of tax collection by the government.