IMPACT OF FISCAL POLICY ON INDUSTRIAL SECTOR OF NIGERIAN ECONOMY

Abstract

The study examined the impact of fiscal policy on industrial sector of the Nigerian economy from 1985 to 2022 using the techniques of dynamic Ordinary Least Squares. Variables considered in the analysis include total tax revenue to Gross Domestic Product, income taxes, taxes on international trade and ratio of foreign direct investment (inflow) to Gross Domestic Product. The study discovered statistical evidence indicating that high income nations had larger total tax revenue to total tax revenue to Gross Domestic Product ratios than do low- and middle-income countries. The rise in per capita income and the number of big and medium-sized enterprises that pay more in taxes to the national government were the main causes of the growth in taxes on income, profit, and capital gains. When considering corporate tax rate and marginal tax rate as the cost of investment, total tax rate total tax revenue to Gross Domestic Product has a considerable impact on foreign direct investment (FDI) inflow. This finding implies that a rise in total tax revenue to Gross Domestic Product will lower a company's profit margin as well as its rate of return on investment (FDI).