FISCAL POLICY AND INFRASTRUCTURAL DEVELOPMENT INNIGERIA: THE WAY FORWARD

This study examined the influence of fiscal policy (debt and Taxation) on Nigeria’s infrastructure development from 1990 to 2021. The study employed ordinary least square (OLS) multiple regression analysis to estimate the model built for the study. From the regression analysis, the R-squared value of 0.797348 indicates that approximately 79.7% of the variation in IFRAC can be explained jointly by the independent variables included in the model. The adjusted R-squared, which accounts for the number of independent variables, is 0.776903, which shows the goodness of fit of the model. The result of the regression analysis revealed that National debt (DEBT) has a statistically significant beneficial effect on infrastructure development (IFRAC), as shown by a positive coefficient of 0.192057 and a probability of 0.0152. However, tax components (PPT, TET, VAT, and CIT) demonstrated a positive effect on infrastructural development as shown in the positive coefficients of (0.019125, 0.077520, 0.005462, -0.048860) respectively but they were insignificant as revealed by probability of (0.8088, 0.7622, 0.9503, 0.4556) respectively contrary to apriori expectation. The study in departure from the literature combines tax components with public debts in its model to generate a more robust results of the effect of fiscal policy on infrastructural development in Nigeria. The outcome of this result holds significant relevance to government policy makers to refocus their policy strategy on tax administration in Nigeria in order to derive the significant impact of taxes on infrastructure development in Nigeria. In particular, the study pointed out the optimal theory of taxation as the anchor for tax policy formulation and administration as a bedrock to facilitate optimal resource allocation for infrastructural development in Nigeria.