1.0 Introduction
1.1 Background of the Study
The concept of taxation sharp momentum after the great would of economic depression of 1930's. After the depression aimed at raising enough capital to provide for social overhead expenses and at the same time embarking on several ways to lift the standard of living of their citizens.
In Nigeria, there are many forms of taxations in practice dating back to the days of our great grand fathers, that is before the coming of our colonial masters, whereby communities tax themselves through labour to execute community projects or to help the community suppress external attack or aggression. Therefore, taxation can be referred to as machinery by which communities or groups are made to contribute part of their incomes in some agreed amount and method for the purpose of administering the society. This accounts for the reasons why taxation is often referred as civic responsibility.
The present tax laws in Nigeria was borne out of the Raisman's fiscal commission of inquiry of 1957. Before them, we only had what was called the income tax colonies with similar providing section 70, subsection 1 of the Nigeria constitution, order in council of 1960 which conferred an exchange power upon parliament to make laws for the whole Nigeria or any part of the country with respect to personal income tax. in the exercise of these powers the federal government enacted the income tax management act of 1961 (ITMA) and because Lagos territory was being administrated as a region it enacted the personal income tax (Logos). Act 1961.
On April 1961, the income tax management act came into operation and all the existing laws at the regional level had to be amended to bring them into conformity with what the Raisman fiscal commission recommend in 1958, the introduction of uniform basic principle of taxing income of persons other than limited liability companies throughout the country. Oliver Wendell Homlmes, United States Supreme Court judge said, “Taxes are the price we pay for a civilized society”.
Nigeria and been an encouragement by the government to attract individuals and corporate bodies to invest in the country. The idea of the research was to assess how the incentives had helped industries grow and how companies had availed themselves of these opportunities.
1.2 Statement of Problems
The study entitled effects of tax incentive in the development of manufacturing industries attempt to determine the way by which some organization or firm especially Emenite Ltd. Emene has utilized huge amounts of money. Nigerian government sacrifice every year by way of tax incentive towards the development of manufacturing industries.
Some of the problems, which they encounter, are as follows.
- Liability of the tax incentives scheme to redirect the investment patterns of individuals and corporate bodies towards the development of manufacturing industries.
- The level in efficiency in administering tax incentives scheme has made it impossible using it to attract foreign investors to the manufacturing industries.
- Liability to use tax incentives in generating employment in manufacturing industries.
- Most manufacturing industries are unable to apply tax incentives in a flexible manner.
1.3 Purpose / Objective of the Study
The purpose this study is as follows:
- To ascertain the extent tax incentives have redirect investment of individuals and corporate bodies towards the development of manufacturing industries.
- To establish how inefficiency in administering tax incentive scheme has made it impossible using it to attract foreign investors to manufacturing industries.
- To ascertain the extent by which most manufacturing industries are unable to apply tax incentive in a flexible manner.
1.4 Research Questions
The research questions of this study are as follows:
- To what extent does tax incentives redirects the investment pattern of individuals and corporate bodies towards the development of manufacturing industries?
- To what extent does inefficiency in administering tax incentive scheme distorts foreign investors to manufacturing industries?
- To what extents does tax incentive help in employment generation?
- To what extent does most manufacturing industries were unable apply the tax incentives in a flexible manner?
1.5 Significance of the Study
This work will be very useful to the government. It will enable the government to know the extent manufacturing industries have been responding to the available tax incentives.
Government, through this research could evaluate the profitability of the tax incentives that is whether the revenue in other words, it will enable government to know whether tax investment patterns of individuals and corporate bodies towards the development of manufacturing industries.
This study will also enable government to compare the identify those that are profitable to the Nigerian economy at large.
This study will go a long way to sensitize companies and individuals on the existing tax incentives available to the manufacturing industry and their companies to make qualitative investment and tax decision modeled to elevate the organization's growth patterns.
1.6 Scope / Delimitation of the Study
For the scope if this study, the researcher will restrict himself to the corporation tax incentive available to the manufacturing company in Nigeria. With particular reference to Emenite (NIG) Ltd. As a case study.
1.7 Definition of Terms
Incentive:
According to advanced learner's Dictionary, the word incentive is “that which incites or rouses a person action”
Therefore, tax incentive, encompasses all the measures adopted by the government to motivate tax payer or manufacturing companies to respond to their tax obligations. This may includes adjustments to tax policy aimed at lessening the effects on an industry.
The taxation of consumption rather than income may, for instance be considered as an incentive by people who believe that tax payers find it more difficult to bear their income tax burden or direct taxes exert a harsher incidence on the tax base. An incentive is created when the government deliberately manipulates the tax system to the advantage of a potential investor or corporate body by adopting favorable tax policies.
Manufacture:
According to the award illustrated dictionary (COZA), manufacture is defined as making of articles by physical labour or machinery especially on large scale; branch of such an industry.
Industry:
The same dictionary defined “industry” as a branch of trade or manufacture, especially one employing much labour and capital infect, manufacturing in general.
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