ABSTRA CT

 It is not deniable that the effect of tax incentives on economic growth has its peculiar problem. The major problem investigated is that tax incentives are not adequate to positively affect the economic growth of Nigeria, particularly Abia State. In investigating this problem, data were collected from GDP at factor cost. investment level, children allowance value, and dependent relative allowance value for the period of 1988 to 2007.In addition primary data were collected through designed research questionnaire validated by experts and distributed to staff of ministry of finance, Staff of Board of Internal revenue, Staff of FIRS, Staff of selected banks and the general public in Abia State. Descriptive statistics and regression analysis were used in analyzing these data. Findings based on the data collected reveals R2of .439 when do1was tested indicating that 43.9% of the changes in the level of investment is attributable to changes in existing tax incentives. Also when I1O2was tested it reveals R2of .471 indicating that 47.1% of the changes in economic growth is attributable to changes in tax incentives. The researcher therefore recommend that the government should provide adequate incentives that will encourage investment by investors and thereby increase economic growth in our great country, Nigeria. The time to act is now.