THE EFFECT OF FISCAL POLICY ON PRICE AND OUTPUT STABILIZATION IN NIGERIA: 1970-2017
Abstract
This work examined the extent to which taxation, an instrument of fiscal policy affect prices and output stabilization in Nigeria. Annual time-series data were sourced from the central bank of Nigeria statistical bulletin between 1980 to 2017 on gross domestic product (GDP), consumer price index (CPI), corporate income tax and personal income tax. The ordinary least squared (OLS) regression analysis was used to analyze the data. The results of the analysis showed that personal income tax was insignificantly and negatively related to economic growth in Nigeria, while the corporate income tax was insignificantly but positively related to economic growth in Nigeria. This also applied to the case of the price stability model. It was also observed that the poor tax administration system in Nigeria as it encompass tax evasion, tax avoidance and corruption in the system contributed greatly to the ineffectiveness of taxation on economic growth. Based on the results it was recommended that the Nigerian government should set up a proper and well-monitored tax administrative system that would be devoid of corrupt officials to boost economic growth.
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