THE IMPACT OF TAX INCENTIVES ON ECONOMIC AND INDUSTRIAL DEVELOPMENT

 

ABSTRACT

 

          This impact of Task incentives of Economic and industrial development of Enugu state Intends to examine the extent individuals ad companies have been responding to the incentives scheme.  How these incentive have been stimulating and motivating these bodies on employment opportunities.  The researcher intends to examine also how these incentives have been helping existing industrials and companies in expanding their areas of operations in Enugu ad to know if the expected result of these incentives are achieved by the firms who benefit from these relives.

Some of the factors which have motivated the researcher in this study include: weakness of the firm to respond to the desired objective, lack of awareness and the aims for granting the relief in adequacy of incentives to sustain the desired development.

In this work, the researcher looked into textbooks journals, articles and administered questionnaires to practicing personalities which include tables were used in analyzing the data collected, it was revolved that more than 50% of the firms and individuals studied are aware  of the incentive.  A good number of them did not go into production, because of the incentives and more than 50% suggested that more incentives should granted.

 

TABLE OF CONTENTS

 

Title page                                                                                I

Approval page                                                                        ii

Dedication                                                                               iii

Acknowledge

Abstract

List of tables

 

CHAPTER ONE

• Introduction

1.1     Statement of problem

• Purpose of the study
• Research questions
• Significant of the study
• Scope and limitation of the study
• Definition of terms

 

CHAPTER TWO

REVIEW OF LITERATURE

• Introduction

2.1     Criticism of the Tax and incentives scheme

• Argument for tax incentives
• Petroleum profit tax act 1959

 

CHAPTER THREE

RESEARCH METHODOLOGY

• Introduction

3.1     Primary source of data

• Secondary data
• Population studies
• Sample use and size
• Methods of data analysis

 

CHAPTER FOUR

• Data presentation and analysis
  • Research questions analysis

 

CHAPTER FIVE

Discussion of finding, conclusion and recommendation

• Summary of finds

5.1     conclusion

• Recommendation

Bibliography

Appendix I

Appendix II

 

 

 

 

 

 

 

 

PROPOSAL

 

          This research intends to highlight tax incentives on Economics and industrial development of Enugu State.  It also seeks to examine the extent to which individuals and companies have been responding to the incentive scheme.  The research will also show how these incentives have been helping existing industries and companies in expanding their areas of operations in Enugu state, and to know if the expected results of these incentives are achieved by firms who benefit from these relieves.

In pursuance of this research study, the research will gather data through text books journals articles and questionnaires will be administered to practicing personalities.  Data gathered will than be analyze using tables.

In the course of this research study, the researcher will face some constraints which include time constraint, financial constraint and inadequate materials.

Some recommendations will be made which if implemented by tax exparct,  consultant, individuals and economic analyst will enhance a better  tax incentives.

CHAPTER ONE

 

INTRODUCTION

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

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

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

The government infrastructure facilities such as roads, water supply, electricity hospital etc more reallocate resources to the public sector charging mix input.  By borrowing rather than taxing, the federal government has a better chance of expanding investment spending which is essential to enlarge our production possibilities and attaining increase in standard of living.

In order hand, these incentive can be targeted on low income earners. This will normally increase their saving which is necessary for higher investment.

Tax incentive also create employment opportunities people which help to fight depression, inflation thereby increasing distribution of income and wealth.

 

1.1     STATEMENT OF THE PROBLEM

          This impact of tax incentive on economic and industrial development using Enugu state as a case study although there are many advantages got were tax incentives are use for economy and industrial development most task experts, consultants individuals and economic analyst ignored or criticized tax incentives  because of the following.

1. The impact of incentives are not effective in the economy
2. The exemption privilege not granted to all firms in an industry which place some companies at a competitive disadvantage
3. Many management of firms, companies lack awareness of the incentive
4. The incentive granted are not adequate to the development and growth of industry
5. Unwillingness of some companies and individuals to claim the incentive. This is because they do not understand the role.

 

PURPOSE OF THE STUDY

Tax incentive is a strong fiscal measure or policy which can stimulate investment and savings leading to capital information.  This  capital acquisition can be used productively in economic and industrial development of companies and individual can use them effectively.  In deciding if these incentives can stimulate the companies and individuals to invest in the economy.  One basic fact is this whether the company individual concern decided to go into business because of tax incentives offered.  In this study the researcher intends or  companies, have been responding intend or companies, have been responding to incentive scheme how these incentive have been stimulating and motivating these bodies to establish industries, which will create employment opportunities.

Moreover,  he researcher intends to examine how these scheme has been helping existing industries and companies in expanding their areas of operation in Enugu

 

RESEARCH QUESTIONS

1. Can these tax incentives attract foreign investors in Nigeria via – Enugu state?
2. Are the existing tax incentive adequate for development?
3. Are those incentives claimable by the companies?
4. Do these incentive stimulate individuals to establish new enterprises?
5. Do these tax incentives induce the existing industries in Enugu to pursue vigorous policy expansion?

 

1.3     SIGNIFICANCE OF THE STUDY

          Tax incentive scheme is an economic policy, which exist among many other competing alternatives.  The scheme may be an inducement towards rightful investment, securing proposal on private investors lay behind, it then follows that if the scheme is a pale shadow for pilling stock of profitable that the benefits expected from these incentives should be able to justify the cost.

1. As a result of creating many industries and subsequent expansion of existing ones, it standard of living of the populace will increased.
2. Tax incentives will helps in small scale industries which will subsequent expansion of existing one’s the standard of living of the populance will be increased.
3. Tax incentive scheme leading to diversification will be also result in increasing Urban and rural development. It is the intention of the researcher to look into ways and extent the existing tax incentives are being used by entrepreneurs in setting up industries establishment in Enugu State.

 

1.4     SCOPE AND LIMITATION OF STUDY

          The study covers the impact of tax incentives in economic and industrial development, it is limited to some tax offices in Enugu state limitation.  To this work includes:

Time: the writer was face with appropriation her time between writing this project and performing her academic function as well as meeting her social needs.

Responses: some people; I will  met may not be ready to given an answer to the question I ask and some see me as a spy as a result of this work.  Consequently, a great deal of emphasis was placed on questionnaires and oral interview that cost  consideration time and money.

DEFINITION OF TERMS

1. Tax incentive: tax incentives are relief granted to tax payers or industries in the form of set off from total in comer or gain before tax liability is determined. In the case of industries ore companies is inform of tax holiday it is established by the legislation authority such payment of taxes.
2. Disposal income: is that personal incomes available for consumer spending saving and investment consisting of all income minus taxes and other payment 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. Pension fund: it is any society fund contact or scheme.

The assets which are held under irrevocable trust and any scheme established by law in Nigerian or other places, the main objectives of which and the provision of non-assignable and non commitable retirement  pension

5. Tax Evastion: It is the deliberate attempt to defraud tax authorities by an individual or company by giving false information of his or her revenue.
6. Dependent Relative Allowance: The relative must be old and closely related to the tax payer or his spouse.  His income must not exceed N900.  This allowance of N2,000.00 is also distributable between among those who contributed in maintaining the relative.
7. Children Allowance: The children must below 16 years but if above must be receiving full-time education or is articles or indentured in a trade or profession in that year. The child’s allowance of (N) 2,500 is distributable between two or more people who maintain a child.
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. Initial allowance: (Section 7 (1) of PTD 1993) is granted only one in the life A an asset the year the asset is first used. It is allowed fully on the cash value regardless of the number of month, weeks or days the assets is used in the first year.
10. Annual allowance: this is provided in section (1) of the decree.  Annual allowance is granted each year of assessment in respect of any asset used wholly, exclusively, necessarily and reasonably till the end of the accounting year for the purpose of the trade
11. Depreciation: The lose of usefulness or value of fixed asset of group of asset they cannot be restored by repair because of wear obsolescence or inadequacy. Some of the ways of calculating depreciation include the appraised method, unit method and working hours method.
12. Exploration incentives: All expenditure which exclusively, necessarily and reasonably incurred for the purpose of petroleum operations are dimmable as reflection from some of that period.
13. Investment tax credit: Investment tax credit replaced the old initial allowance granted in respect of qualified capital  expenditures.

14      Loss relief: A company under the act may elect to defer the set off or a less incurred to another accounting period.

15. Tax off-set: section (17) of the act provides that custom duties on essential plants, royalties on domestic sale of crude oil and investment tax credit should be deducted in full before arriving at the chargeable tax to be paid by such company.
16. Roll over relief: Capital giant act grants a roll over relief to a disposer or an owner of an assets which is destroyed or provided that the capital sum received is applied within three years to purchase another asset in order to replace the one destroyer or lose.

 

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