AN ASSESSMENT OF TAXATION ON NIGERIAN ECONOMIC DEVELOPMENT
The study of tax is part of the study of public finance which is concerned with the revenue and expenditure of government, how they are obtained and disbursed, and the role of these operations on the economy.
The aim of this research work, is an assessment of taxation on Nigerian economic development. Howe taxation affects the individuals, companies and government in terms of production distribution, savings, investment etc. with a view to enhancing the economic development and growth of the country.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
Background to the Study
Statement of Problems/Questions
Significance of the Study
Scope of the Study
Limitations of the Study
Definition of Terms
CHAPTER TWO: LITERATURE REVIEW
The Role of Taxation in Developing Economy
Classification of Taxes
Nature of Taxes
Objectives of Taxation
The Canons of Taxation
Features of a Good Tax System
Concept of Developed Economy
Characteristics of a Depressed Economy
Causes of Economic Depression
Taxation During Depression
Taxation During Inflation
CHAPTER THREE: RESEARCH METHODOLOGY
Sources of Data
Methods of Data Analysis
CHAPTER FOUR: DATA ANALYSIS
Analysis of Biographical Characteristics
Analysis of Response to Research Questions
Analysis of Interviews/Recommendations
Test of Hypothesis
CHAPTER FIVE: SUMMARY, FINDINGS, CONCLUSION AND RECOMMENDATIONS
Summary of Results
BACKGROUND TO THE STUDY
The magnitude of government surplus or deficit is probably the single most important statistic measuring the impact of government fiscal policy on an economy (Siegel, 1979). In view of its phenomenal growth, it is now widely accepted that public sector finances and related policies constitute a central aspect of economic management. The quality of this management in no small measure influences overall macroeconomic performance as well as the distribution of resources between the public and the private sectors.
Fiscal deficit has become a recurring feature of public sector financing all over the world. Its widespread use is partly influenced by the desire of various government to respond positively to the ever-increasing demands of the populace and to enhance accelerated economic growth and development (Ariyo, 1993). This tendency toward deficit financing is more pronounced in developing countries where the populace looks to the government for the satisfaction of most needs.
Of concern to economists and interested observers in recent time is the rising magnitude of deficits by various governments. There is therefore a growing recognition that the formulation and implementation of macroeconomic management proposals, most especially for economic reforms, should explicitly recognize the implications of fiscal deficit on the economy. These reforms should cover not only the size and financing patterns of government deficit but also the structure of taxation and the level and composition of public expenditure (Chibberand Khalizadeh – Shirazi 1988).
The term taxation refers to revenue generated by government from the private sector in order to attain some of the nation’s economic objectives. According to Ajie et al (2005), taxation is the transfer of resources from private to the public sector in order to accomplish some of the economic and societal growth and development.
The tax system of Nigeria dates as far back as before the amalgamation of the country. However, the tax system cannot be said to be fully developed as it is still undergoing the structural adjustment in its administration.
Taxation is an instrument of fiscal policy, which is concerned with government spending and collection of money through taxes with an aim of influencing the state of national economy. Taxation as a primary source of government revenue, has been defined by various tax professionals and authors. However, it should be noted that form the various definitions made, it has been deduced that taxation is compulsory and it’s imposed on the profit income or wealth of an individual or corporation.
The New Encyclopedia – Britannica defines tax as “compulsory levies that are regularly imposed and as rule, not designated for a special purpose, they are regarded as a contribution to the general revenue pool from which government finance their expenditures”.
Taxation as an assessment of economic development in Nigeria perform the following functions:
A tool for stabilization
Income re-distribution purposes amongst others.
Taxation is the pivot on which the country’s social and environmental development rotates. It has been responsible for the funding of several national projects. For good things or developmental changes to be ensure in an environment, taxation is inevitable, and this tax can either be directly or indirectly carried-out based on their nature.
Depending on tax nature, taxation may have positive or negative effect on the tax payer, it may be an incentive or a disincentive to work or save. When marginal rate of tax is high, it become a disincentive to work, but when low it become an incentive to hard work or work hard, like the strike that too place 8th June 2009 in Ambrose Alli University, Ekpoma, Edo State, Nigeria. When Academic Staff Union of University (ASUU) of the above chapter when on strike over the increment of tax rate by the state Governor Adams Oshomole. Value Added Tax (VAT) or advalorem tax is an incentive to save; while tax levied on interest earned on bank deposit is a disincentive to save (Aguolu 2004).
The primary goal of a developing country like Nigeria is to increase the rate of economic growth and per capital income which may lead to high standard of living. It would be said, that taxation is the prominent methodology of financing economic development open to developing countries. The level of expenditure is to a great extent dependent on the ability of the tax system to place the required revenue at the disposal of the government.
So many research were embarked upon by economic experts, both home and abroad as to how Nigeria could be emancipated from her economic crises, and how to laugh her on the path of economic growth. Based on the analysis of these economics experts solution were preferred which equally found its expression in the adoption of economic deregulation policies in the economy.
The aim of every business activity is to make profit at a minimum cost, and taxation are not exception to this rule. Though taxation have his characteristic paramount in their objective, they do not contravene federal government policies which are imposed on them with the main objective of developing and transforming the economy.
STATEMENT OF PROBLEMS/QUESTIONS
There is a general feeling that the tax administration and collection system in Nigeria are poor and not been able to achieve the objective for which they were established due to the factors militating against and beyond its control.
This study seeks to find answers to the following questions:
What role does taxation play in the economic development?
What are those factors that will possibly lead to the problem of taxation in an economic development?
To what extent does taxation attract a high level of economic development in Nigeria?
What is the relevance of tax to the socio-economic development of the country Nigeria?
What are the effect of taxation on economic development?
The main objective or purpose of this research is to know how taxation can be used in the economic development of Nigeria.
Other objectives are:
To know the taxation of individuals companies and the government in an economic development in Nigeria.
The ways which taxation can stimulate the economy and also generate revenue for the three tiers of government in an economic development in Nigeria.
Possible ways of enhancing government revenues drive in an economy.
To create an awareness on the relevance of taxation in the socio-economic development in Nigeria as a country.
The contribution of tax in the development process of Nigeria, as well as regulation of the economy.
1. Hi: There is a significant relationship between taxation and the economic development of a country.
Ho: There is no significant relationship between taxation and the economic development of a country.
2. Hi: There is a significant relationship between government revenue from taxation, and tax evasion and avoidance.
Ho: There is no significant relationship between government revenue from taxation, and tax evasion and avoidance.
3. Hi: There is a significant relationship between government revenue from taxation, and tax administration.
Hi: There is no significant relationship between government revenue from taxation, and tax administration.
SIGNIFICANCE OF THE STUDY
This study is relevant or significant in that:
It will afford anybody who read this work the opportunity of appreciating taxation as an integrated point of economic development.
It will enable the individuals, corporate bodies and the public to consider taxation as one of the determining factor of economic development.
It will enable the government to adopt a tax policy which may raise the rate of savings and capital formation of Nigeria.
It is therefore hopeful that this study will be useful to government, companies and knowledge seeking individuals and the general public.
SCOPE OF THE STUDY
This research is concerned mainly about taxation as a measure on assessing economic development on the tax payer, that is the individuals, companies and the Nigerian government. Therefore, in the investigation the researcher will be mainly concerned with
Federal Board in Inland Revenue (FBIR) in Edo State.
State Board in Internal Revenue (SBIR) in Edo State.
The Ministry of Finance and Economic Development in Edo State.
LIMITATIONS OF THE STUDY
Irrespective of the broadness and all there have been some limiting factors in this project research. Some of the factors have been financial constraints to unearth research materials for a thorough research, uncooperative attitude of some of the revenue service officials as well as time constraints due to the academic calendar.
DEFINITION OF TERMS
Federal Board of Internal Revenue: The administration of the companies tax including petroleum profit tax is vested in the Federal Board of Internal Revenue, whose operational aim shall be known and called federal inland service – ABOH, S. O. (1999).
State Board of Internal Revenue: The administration of the income tax law in each state of the federation is vested in the state board of internal revenue, whose operational aim is known as the state internal revenue service. OGHUMA, R. I. (2002).
Tax Avoidance: is when a tax payer, without offending the law arranges his affairs in such a way that he pays little or no tax. Tax avoidance itself is not an offence against the land – FERAYOLA, G. O. (1987).
Tax Evasion: This is an illegal method of reducing the tax payer’s tax liability such as rendering of incorrect returns by omitting or understanding of the income – FERAYOLA, G. O. (1987).
Capital Allowance: Depreciation of fixed assets is not an allowable deduction in computing adjusted profit for tax purpose. This could be as a result of the various depreciation method that are available for use by companies, in place of depreciation, the Act allows Capital allowance, claimable at various rates in respect of qualifying capital expenditure – OGHUMA, R. I. (2002).
Economic Development: It is essentially a process whereby the real per capital income evolves and increases overtime. It involves how the fruit of economic growth spread gross investment – MAYER ASSOCIATE (1992).
Economic Growth: Means an increase in real per capital income (GNP/population) over time – MAYER ASSOCIATE (1992).
Fiscal Policy: This raises or lower government expenditures and taxes. Thus it includes consideration for both taxation receipt and government expenditure fiscal policy involves the controlling of demand through taxation and budget – MAYER ASSOCIATE (1992).
ABOHI, S. O. (1999), Personal Income Tax and Company Income Tax in Nigeria, A & B Computer Venture, Auchi.
ADEMOLA, A. A. (1997), Productivity of the Nigeria Tax System – AERC Research paper 67, African Economic Research Consortium, Nairobi, November 1997.
FERAYOLA, G. O. (1987), Guide to Nigeria Taxes, Allcrowns Nigeria, Ikeja.
MAYER ASSOCIATE (1992), ICAN Practice and Revision Kit Economics, Lagos.
OGHUMA, R. I. (2002), Nigeria Personal Income Taxation, New Era Publication, Benin.
TERMS AND CONDITIONS
Using our service is LEGAL and IS NOT prohibited by any university/college policies
You are allowed to use the original model papers you will receive in the following ways:
1. As a source for additional understanding of the subject
2. As a source for ideas for your own research (if properly referenced)
3. For PROPER paraphrasing ( see your university definition of plagiarism and acceptable paraphrase)
4. Direct citing ( if referenced properly)
Thank you so much for your respect to the authors copyright.
For more project materials
Log on to www.grossarchive.com