TAX REFORMS 2025: A CATALYST FOR SUSTAINABLE INDUSTRIAL DEVELOPMENT IN NIGERIA

Abstract

This study focused on Tax Reforms 2025: A Catalyst for Sustainable Industrial Development in Nigeria with the objective of assessing the effect of the recent fiscal policy changes on industrial growth, investment behaviour and sustainability outcomes in Nigeria. Specific objectives were to determine the impact of tax reforms on industrial growth, tax incentives on investment in industrial activities, and the relationship between tax reforms and environmental sustainability in industrial activities. The research design employed was explanatory research design. The secondary data obtained was related to macroeconomic indicators related to manufacturing output, tax revenue performance, industrial investment, inflation and exchange rate movements. The study used the Auto Regressive Distributed Lag to examine the short and long run relationships between the variables, while descriptive statistics was used for the general information. The empirical results showed that tax reforms are positive and statistically significant to industrial growth in Nigeria with regression coefficient of 0.62 and probability value of 0.012. Likewise, the tax incentive was obtained with a coefficient of 0.45 and a probability value of 0.014, which suggests that tax incentives encourage investment in the industrial sector. Long run estimates further showed that tax reforms have a lasting positive effect with a coefficient value of 0.75 and probability value of 0.010 that indicates continuous benefits to industrial development. The impact was negative on the other hand on industrial performance, with the coefficients of minus 0.28 and minus 0.15 respectively for inflation and exchange rate instability, suggesting that the negative effects of macroeconomic instability on the effectiveness of fiscal reforms were greater. Based on the study, it is concluded that in Nigeria, tax reform as an economic instrument is a catalyst for sustainable industrialization, but its effect is constrained by the other economic factors. The study suggests more effective coordination of policies, better tax incentive systems and greater macroeconomic stability for achieving the full potential of the 2025 tax reforms for industrial transformation.