TAX POLICIES AND INCENTIVES ON THE PRODUCTIVITY OF MANUFACTURING FIRMS IN OGUN STATE, NIGERIA

Abstract

This study examines the effects of tax policies and incentives on productivity of manufacturing firms in Ogun State, Nigeria. The manufacturing sector is responsible for the industrialization of Nigeria, employment creation, and economy diversification, but it is undermined by multiple taxation, high compliance cost, and inconsistent policy implementation. Based on Stakeholder and Laffer Curve theories, the research examines the impact of company tax revenue, value-added tax, tax on education, and incentive schemes such as tax holiday and pioneer status benefits on business performance. Under a descriptive survey research design, primary data were collected from 400 workers of sampled manufacturing firms such as Dangote Cement Plc, Nestlé Nigeria Plc, and so on. Data were analysed using descriptive statistics and multiple regression. Findings show that inefficient tax policies and expensive compliance reduce firm productivity by a significant degree, while tax incentives and the effectiveness of tax administration have weak and statistically insignificant effects. The evidence is consistent with a paradox in which productivity gains are more likely to be stimulated by firm-level activity than by fiscal activity. The study concludes that harmonizing tax systems, reducing burden of compliance, and enhancing transparency in incentive management are crucial towards facilitating industrial development in Ogun State. Policy relevance highlights the need for reforms balancing revenue collection with sustainability of productivity.