AN EVALUATION OF THE EFFECT OF INDIRECT TAXATION ON CONSUMPTION IN NIGERIA

  • Type: Project
  • Department: Accounting
  • Project ID: ACC1493
  • Access Fee: ₦5,000 ($14)
  • Chapters: 5 Chapters
  • Pages: 60 Pages
  • Format: Microsoft Word
  • Views: 837
  • Report This work

For more Info, call us on
+234 8130 686 500
or
+234 8093 423 853

AN EVALUATION OF THE EFFECT OF INDIRECT TAXATION ON CONSUMPTION IN NIGERIA

 

CHAPTER 1: INTRODUCTION

1.1   Background of the Study

The mono-product status of the Nigerian economy has received series of criticisms in recent times. According to Okonjo-Iweala (2012), without the diversification of Nigerian revenue from oil, the economy will soon collapse. Recently, Nigeria’s dependence on crude export for revenue based on the projected price and assumed production is 80%. However, oil revenue has accounted for over 76% of government revenue. (Ebosele & Adekoya, 2012). The implication of this overly dependence on oil revenue is the boom-and burst nature of the economy (Akpokodge, 2000).

Against the backdrop of the need to diversify the economy of Nigeria, taxation has come extremely handy. Taxation is made up of two broad components and several subcomponents and basically we have indirect and direct taxation. For purposes of this study, emphasis is on indirect tax considering its effect consumption in Nigeria.

However, an indirect tax (such as sales tax, per unit tax, value added tax (VAT), or goods and services tax (GST)) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer), this is the major reason why it has great influence on consumption. The intermediary later files a tax return and forwards the tax proceeds to government with the return. In this sense, the term indirect tax is contrasted with a direct tax, which is collected directly by government from the persons (legal or natural) on whom it is imposed (Wikipedia, 2015).

An indirect tax may increase the price of a good to raise the price of the products for the consumers. Examples would be fuel, liquor, and cigarette taxes. An excise duty on motor cars is paid in the first instance by the manufacturer of the cars; ultimately, the manufacturer transfers the burden of this duty to the buyer of the car in the form of a higher price (Lim, 2008). Thus, an indirect tax is one that can be shifted or passed on. This is a function of the relative elasticity of the supply and demand of the goods or services being taxed. Under this definition, even income taxes may be indirect.

Indirect taxation is policy commonly used to generate tax revenue. Indirect tax is so called as it is paid indirectly by the final consumer of goods and services while paying for purchase of goods or for enjoying services. It is broadly based since it is applied to everyone in the society whether rich or poor. Since the cost of the tax does not vary according to income, indirect taxation is a proportional tax. However, indirect taxation can be viewed as having the effect of a regressive tax as it imposes a greater burden (relative to resources) on the poor than on the rich. The taxpayer who pays the tax does not bear the burden of tax; the burden is shifted to the ultimate consumers. Therefore, indirect tax have effect on consumption and the standard of living of the general public.

1.2   Statement of the Problem

Evidence so far supports the view that indirect tax is already a significant source of revenue in Nigeria. For instance, revenue from indirect tax in the year of its inception (1994) was N8.194 billion, which was 36.5 percent greater than the projected N6 billion for that year (Ajakaiye, 1999). However, the members of the organized private sector have been voicing their reservations in the sense that indirect tax is taking a toll on the prices of their products thereby affecting consumption in Nigeria. From an economic point of view, one expects the price of goods subject to indirect tax to rise, however, beyond this expected rise, businesses are taking advantage of the existence of indirect tax to increase prices of goods and services arbitrarily. According to Aruwa (2008), the resulting price increase has led to higher inflation. This may have prompted Mclure (1989) to state that policy makers should be concerned about the macroeconomic impact of indirect tax, especially on prices, output, income and consumption, before considering its adoption. However, the researcher is evaluating the effects of indirect taxation on consumption in Nigeria

1.3   Purpose/objectives of the Study  

The following are the objectives of this study:

1.  To evaluate the effects of indirect taxation on consumption in Nigeria.

2.  To identify various forms of indirect taxation imposed in Nigeria and their respective effects.

3.  To determine other factors that affect prices of goods and consumption in Nigeria.

1.4   Research Questions      

1.  What are the effects of indirect taxation on consumption in Nigeria?

2.  What are the various forms of indirect taxation imposed in Nigeria and their respective effects?

3.  What are the other factors that affect prices of goods and consumption in Nigeria?

1.5   Research Hypothesis

HO: There is no significant relationship between indirect taxation and consumption in Nigeria

HA: There is significant relationship between indirect taxation and consumption in Nigeria

1.6   Significance of the Study     

The following are the significance of this study:

1.  The results of this study will provide a basis for minimizing the adverse effects of indirect taxation by the Federal government of Nigeria, while consolidating its benefits because this study will assess the macroeconomic impact of indirect taxation on general price levels and consumption in Nigeria.

2.  This research will also serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic.

1.7   Scope of the Study

This study on the evaluation of the effect of indirect taxation on consumption in Nigeria will cover all types of indirect taxation on prices of goods and services, consumption and standard of living in Nigeria

1.8   Limitation of the study

1.        Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

2.        Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.9   Definition of Terms       

Taxation: A means by which governments finance their expenditure by imposing charges on citizens and corporate entities. Governments use taxation to encourage or discourage certain economic decisions.

Consumption: the using up of a resource.

Revenue: income, especially when of a company or organization and of a substantial nature.

Inflation: Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.

REFERENCES

Akpokodge, G .(2000). The effects of export earnings fluctuation on capital formation in Nigeria; AERC Research paper, African Economic Research Consortium, Nairobi, Kenya.

Ebosele, M and Adekoya, F (2012). Worries over great reliance on oil, neglect of real sector. The Guardian 29 (12,303), 2.

Okonjo-Iweala, N. (2012). Diversification of Nigeria economy. Sunday Punch, 18, (19), 685:57.

Mclure, Charles E., Jr. (1989) 'Income distribution and tax incidence under VAT' in Gillis, Makolm, Carl S. Shoup and G. P. Sicat (eds) Value and Taxation in Developing Countries. Washington D.C.: The World Bank.

Ajakaiye, Dele Olu (1999) 'Macroeconomic Effects of VAT in Nigeria: a Computable General Equilibrium Analysis', African Economic Research Consortium Papers, n. 92.

AN EVALUATION OF THE EFFECT OF INDIRECT TAXATION ON CONSUMPTION IN NIGERIA
For more Info, call us on
+234 8130 686 500
or
+234 8093 423 853

Share This
  • Type: Project
  • Department: Accounting
  • Project ID: ACC1493
  • Access Fee: ₦5,000 ($14)
  • Chapters: 5 Chapters
  • Pages: 60 Pages
  • Format: Microsoft Word
  • Views: 837
Payment Instruction
Bank payment for Nigerians, Make a payment of ₦ 5,000 to

Bank GTBANK
gtbank
Account Name Obiaks Business Venture
Account Number 0211074565

Bitcoin: Make a payment of 0.0005 to

Bitcoin(Btc)

btc wallet
Copy to clipboard Copy text

500
Leave a comment...

    Details

    Type Project
    Department Accounting
    Project ID ACC1493
    Fee ₦5,000 ($14)
    Chapters 5 Chapters
    No of Pages 60 Pages
    Format Microsoft Word

    Related Works

    ABSTRACT Tax has been one of the major revenue sources in Nigeria. The taxes paid come back to the taxpayers in the form of social amenities. However experience has shown that most Nigerians (both individual and corporate citizens) avoid or evade tax obligation for reason that it negatively affects their consumption. The study was carried out to... Continue Reading
    IMPACT OF INDIRECT TAX IN GOVERNMENT EXPENDITURES INDIRECT TAX AND GOVERNMENT EXPENDITURES IN NIGERIA ABSTRACT The broad objective of this study is to investigate the Impact of Indirect Taxes on Government Expenditures in Nigeria. Data was collected and analyzed using panel based regression. Macro-economic variables which include Customs and... Continue Reading
    ABSTRACT This study was carried out to ascertain the contribution of indirect tax to economic growth in Nigeria. Five hypotheses were postulated for the study. The hypotheses were to find out the relationship between various types of indirect taxes and economic growth. The scope of the study covered the... Continue Reading
    ABSTRACT The contribution of taxation to any economy globally cannot be overemphasized. Apart from the revenue function it performs for the government, it is also used to assist the national government to achieve the country’s macroeconomic objectives in areas of fiscal and monetary policies. Past documentations have revealed that revenue from... Continue Reading
    CHAPTER ONE BACKGROUND TO THE STUDY 1.1    INTRODUCTION The roles of advertising on the consumption of fast food cannot be over emphasized. Advertising is an important part of the promotional mix which is one of the strategic importance’s. It can play a vital complementary role through working alongside of other promotional mix element. It... Continue Reading
    Abstract This study investigates the effect of inflation on consumption pattern on farming household in Nigeria. The Nigerian economy had faced with inflationary trends over the years and the various government policies to deal with it eluded long- term solution needed to... Continue Reading
    Abstract The study focused on the effect of energy consumption and environmental degradation on economic growth in Nigeria. The empirical analysis that was carried out to achieve the objectives mentioned above were diagnostic tests such as unit root, co-integration, Error Correction Model (ECM) and ordinary least square (OLS) which aimed at... Continue Reading
    Abstract The study focused on the effect of energy consumption and environmental degradation on economic growth in Nigeria. The empirical analysis that was carried out to achieve the objectives mentioned above were diagnostic tests such as unit root, co-integration, Error Correction Model (ECM) and ordinary least square (OLS) which aimed at... Continue Reading
    THE EFFECT OF INFLATION ON CONSUMPTION AND SAVING IN NIGERIA: A CASE STUDY OF OREDO LOCAL GOVERNMENT AREA OF EDO STATE ABSTRACT This study has been designed to investigate the effect of inflation on the economic development of Edo State, a case study of Oredo Local Government Area. The finding of the study revealed some of the problems of the... Continue Reading
    ABSTRACT Over the years, the important of the taxation to all establish government, be it democratically elected or monarchical elected or even military rule has especially a greater deal of sophisticated. Tax law and statutes has been implemented to raise income for the government. This become massive project like building of the bridges, road... Continue Reading
    Call Us
    Get this work
    whatsappWhatsApp Us