1Department of Economics, Federal University, Oye-Ekiti, Ekiti State, Nigeria
2Department of Economics, Federal University, Oye-Ekiti, Ekiti State, Nigeria
3Department of Economics, Bowen University, Osun State, Nigeria
The history of industrial development and manufacturing in Nigeria was a vivid illustration of how a nation could abandon an important sector in the economy through policy inconsistencies and distractions attributable to the discovery of oil. The Nigerian manufacturing sector faced a lot of challenges which included inappropriate and inconsistent policies, lack of economic potential for rapid economic growth and development, and poor coordination of the fiscal policies. The basic objective of the study was to critically examine the impact of government taxation and expenditure on the performance of the manufacturing sector in Nigeria. The time series data for the Nigerian manufacturing sector and fiscal policy from 1980 to 2014 was used due to availability of data. The datae were obtained from Central Bank of Nigeria (CBN) publications which included the statistical bulletin, Annual reports and Statements of Account etc. The Ordinary Least Square (OLS) estimation method was employed in obtaining the numerical estimates of the coefficients in the model using E-views. For the findings, the OLS results showed that there was positive and significant relationship between Government Expenditure and the manufacturing sector and also there was positive relationship between Government Tax Revenue and the manufacturing sector. The following recommendations were proffered towards enhancing the impact of taxation and Government expenditure on manufacturing sector in Nigeria. Expansionary policies on fiscal policy measures should be encouraged as they play vital role for the growth of the manufacturing sector output in Nigeria. There was need to redirect fiscal policy measures towards making Nigeria a producer nation through manufacturing sector. Government economic policies on diversification of the economy should focus more on the manufacturing and agricultural production to enhance the performance of manufacturing sector, so as to create more employment opportunities, foreign exchange earnings and conservation, economic growth and development of the nation. Tax incentives should be granted to the manufacturing sector and more Government expenditure on infrastructural facilities such as electricity, water and roads to reduce the cost of production in the manufacturing sector in Nigeria.
Taxation, Government expenditure, Manufacturing sector, Ordinary Least Square, and Infrastructural Development
