The Impact Of Tax Incentives On Enconomic And Industrial Development

THE IMPACT OF TAX INCENTIVES ON ENCONOMIC AND INDUSTRIAL DEVELOPMENT

 

ABSTRACT

The impact of tax incentives on economic and Industrial Development intends to examine the extent individuals and companies have been responding to the incentives scheme. How these incentives have been stimulating and motivating these bodes on employment opportunities. The researcher intends to examine also how these incentives have been helping existing industries and companies in expanding their areas of operations to know if the expected result of these incentives have been achieved by the firm who benefit from their relieve.         Some of the factors which have been motivate the researcher in the study include: Weakness of the firm to respond to the desired objectives, lack of awareness and the aims for granting the relief in adequacy of incentives to sustain the desired development. In this work, the researcher will look into textbooks, journals, articles and administered questionnaire to practicing personalities which include tables will be used in analyzing the data collected.

TABLE OF CONTENTS

CHAPTER ONE:        

1.0     INTRODUCTION:

1.1     Background of the Study

1.2     Statement of Problem:

1.3     Objective of the Study

1.4     Research Question:

1.5     Research Hypothesis:

1.6     Significance of the Study

1.7     Scope and Limitations of the Study:

1.8     Definition of Terms:

CHAPTER TWO:

2.0     REVIEW OF RELATED LITEERTURE

2.1     Theoretical Review of Related Literature

2.2     Empirical Review of Related Literature:

CHAPTER THREE:

3.0     RESEARCH DESIGN AND METHODOLOGY:

3.1     Research Design

3.2     Area of Study:.

3.3     Population of the Study

3.4     Sampling Method:

3.5     Research Methodolog

3.6     Validity and Reliability  of Research Instrument

3.7     Source of Data

3.8     Methods of Data Analysis:

CHAPTER FOUR:

4.0     DATA PRESENTATION AND ANAYSIS:

4.1     Research Question Analysis

CHAPTER FIVE:

5.0     SUMMARY OF FINDINGS/CONCLUSION AND

RECOMMENDATIONS:

5.1     Summary of Findings:

5.2     Conclusion:

5.3     Recommendations:

Bibliography:

Appendix

CHAPTER ONE

1.0       INTRODUCTION

1.1   BACKGROUND OF THE STUDY

        The mode by which economic and industries can be effectively and efficiently develop have  a problem, as a result, government charges lets tax in order to encourage investments and activities in those areas which helps to improve the production capacities, active economic growth as well as allocation of resources in social desirable manner.

Tax incentives is the use of government spending and tax policies to influence the level of national income. Taxation itself is the process or means by which communities or group are made to contribute part of their income for the purpose of administering the society.

This measure will encourage new enterprises to spring up, thereby reducing profit tax which encourage production to curb unemployment. Government should provide employment opportunities to improve our economy.

The government infrastructural facilities such as good roads, water supply, electricity, hospital etc, more allocation of resources to the public sector, the Federal Government have a better chance of changing or expanding investment spending which is essential to enlarge our production possibilities and attaining increase in standard of living.

In other hand, these incentives can be targeted on how income earners can enjoy relief’s. This will normally increase their saving which is necessary for higher investment.

Tax incentives also create employment opportunities to people who help to right depression, inflation thereby increasing distribution of in come and wealth.

1.2   STATEMENT OF PROBLEM

The impact of tax incentives on economic and industrial development. Why most experts, consultants, individual and economic  analyst ignore or criticized tax incentives is because of the following;

1. The impact of incentives are not effective in the economy.
2. Many management of firms, companies lack awareness of the incentive.
3. The incentive granted are not adequate to the development and growth of the industry.
4. Unwillingness of some companies and individuals to claim the incentive.

 

1.3   OBJECTIVE OF THE STUDY

The primary objectives of this study is to assess the impact of tax incentives on economic and industrial development. The secondary objectives are as follows:

1. To ascertain if the companies have been responding to incentive scheme.
2. To discover how these incentive have been stimulating and motivating these bodies to establish industries which will create more employment opportunities.
3. To examine how these tax incentives attract foreign investors in Nigeria.

 

1.4   RESEARCH QUESTION

The following research questions will guide this study.

1. In what ways can the companies respond to incentive scheme?
2. To what extent can these incentives stimulate and motivate these bodies to establish industries which will create more employment opportunities?
3. To what extent can these tax incentives attract foreign investors in Nigeria?

 

1.5   RESEARCH HYPOTHESIS

Research hypothesis of this study are:

1. H₀.   There is no companies that respond to incentive scheme.

H₁.   There is company that respond to incentive scheme.

2. H₀.   There is no incentive that stimulates and motivates these bodies to establish industries which  will create more employment opportunities.

H₁.   There is incentive that stimulates and motivates these bodies to establish industries which will create more employment opportunities.

3. H₀.   There is no tax incentive that attracts foreign investors in Nigeria.

H₁.   There is a tax incentive that attracts foreign investors in Nigeria.

 

1.6   SIGNIFICANCE OF THE STUDY

The significance of this study are in two ways, they are: 

PRACTICAL SIGNIFICANCE

Tax incentives scheme is an economic policy which exist

among many other competiting alternatives. These scheme may be an inducement towards rightful investment securing proposal or private investors lay behind, it then follows that if the scheme is a pale shadow for pilling stock of profitable benefits which are expected from these incentives, it should be able to justify the cost:

1. As a result of creating industries and subsequent expansion of existing ones the standard of living of the populace will increase.
2. Tax incentives will help small scale industries which will

subsequently expand the standard of living of the populace.

3. Tax incentives scheme leading to diversification will also result to increasing urban and rural development.

ACADEMIC SIGNIFICANCE

The academic significance are as follows:

1. This work will be necessary to students and the general public because it will stimulate them and enlighten them on the need of studying tax incentive scheme.
2. It will equally serve as a stepping stone for further research.

1.8   DEFINITION OF TERMS

1. TAX INCENTIVES:  Tax incentives are relief granted to tax payer or industries in the form of the set off from income or gain before tax liability is determined.
2. DISPOSABLE INCOME:  This is that personal in come available to consumer spending, saving and investment consisting of all income minus taxes and other payments to the government.
3. JURISDICTION:      It is the authority of courts or tax officer to hear and determine assessment of tax payer or cases.
4. TAX EVASION: Tax evasion means a tax payer is doing something against the law and if discovered will be death with the law.
5. TAX CODE: This means the total relief’s and allowances granted to an individual tax payer divided by two.
6. TAX AVOIDANCE:   This is a situation whereby the payer can without offending the law arrange his affairs in such a way that he pays little or no tax.
7. INCOME TAX: This means a tax on income. It may be personal income or income tax.
8. CAPITAL ALLOWANCE:  Capital allowance is granted to a qualifying capital expenditure incurred wholly and exclusively for the purpose of the trade or business.
9. TAX OFF-SET: Section (17) of the act provide, that custom duties on essential plants, royalties on domestic sales of crude oil investment tax credit should be deducted in full before arriving at the chargeable tax to be paid by such company.

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