ABSTRACT
Meeting the demands of the society calls for a large bulk of
funds which an individual or community could not contribute alone. One of the
main methods through which these funds are generated for the government is
through taxation. Members of the public who are capable of paying tax are
expected to discharge their civic responsibility by paying their taxes to
contribute to the development and administration of the society at large. Alas,
it is a known fact that every government depends largely to some extent on
taxation for its socio-economic development and as a means of ameliorating the
existing inequalities of wealth in the economy.
Tax
revenue which serves as a lifeblood of any government in power if not utilized
surely leads to reduction in revenue generated by the government, according to
Olaseyitan & Sankay (2012): Saratu (2015) stated that taxes constitute the
principal source of government revenue, and the effectiveness of any government
largely depends on the ability of its citizens to voluntarily discharge their
tax obligations without any coercion or harassment. Is also constitute
Tahoma;mso-hansi-theme-font:major-latin">a major source of revenue to the
government of any country whether direct or indirect taxes collected by the
government inform of income tax, excise duty, import and export duties, motor
park levy, small shop fee, Value added tax, purchase and sales tax. Etc.
assists the government in generating large bulk of revenue for the smooth
administration of a nation.
major-latin;mso-hansi-theme-font:major-latin">
Tahoma;mso-hansi-theme-font:major-latin">Inspite of the relevant legal force
setup by the government of Nigeria, there have not been adequate and sincere
efforts towards enforcing the informal sector on the need for them to pay their
tax instead, they concentrated on the revenue from formal sector, while
overlooking the taxes from the informal sector which is supposed to yield
additional revenue to the country as a whole.
The
complexity and difficulty of tax laws and policy for the common taxpayer from
the informal sector, coupled with some cases which are problematic even for
literate official are one of the reasons why most taxpayers evade tax
payment. In addition to lack of
understanding, many taxpayers are unaware of the existence of certain tax. This
couple with the lack of information, laziness on the part of tax official,
uncooperative taxpayers and the habit of ‘quick –fix’ solutions which solely
encourages the use of the best judgement approach, all this also sum up to lack
of public awareness.
Tax
evasion have adverse effect on government revenue, moreso, it is presumed that
there are legal framework established and setup to punish tax evaders it
perhaps raises a concern on the efficacy and effectiveness of tax laws and tax
administration in Nigeria.
The
main objectives of this research thesis is to fully evaluate the effect of tax evasion
on revenue generation by informal sector, while other specific objectives are
to determine the effective use of taxation as a
veritable tools for economic development and to determine the growing factor
that promotes tax evasion in Nigeria.
This
study will be of significant endeavour in contributing to the existing
knowledge of taxing the informal economy which in the past was not officially
captured into the tax net of the State. It would be useful to the three tiers
of governments in the federation as a potential source of additional revenue
generation process and would promote a wider coverage for taxation.
mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">The primary
data were obtained direct form field study include questionnaire, and direct
interviews, The secondary data employed was obtained was majorly from internet
and from other journal reports, textbooks, CBN guidelines and Annual report or
Publications of professional tax body, CITN, ICAN and ANAN journals,
Newspapers, Seminar report, Circulars, Communiques and Library.
Tahoma;mso-hansi-theme-font:major-latin">The study area focus on Four (4) Local
Government in Ekiti State namely
mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Ado EKiti
Local Government
mso-fareast-font-family:Tahoma;mso-hansi-theme-font:major-latin"> Efon
Local Government, Ikere Ekiti Local Government, Ekiti West Local Government,
Tahoma;mso-hansi-theme-font:major-latin">with partial consideration to the
State Board of Internal Revenue in Ekiti State.
In order to carry out a successful research study, the personal
judgement of the researcher was considered in selecting the preferred local
governments to be visited for respondent in the informal sector population of the study which includes 200
entrepreneur drawn from various trade association due to the nature of the
research, registered entrepreneurs were given first recognition.
Tahoma;mso-hansi-theme-font:major-latin">
It
can also be concluded that, taxing the informal economy will demand not only appropriate
technical policy changes, about which much is known, but also wider administrative
and institutional tax reform strategies that will helps to generate greater
acceptance of such tax-friendly policy among taxpayers and transparent leadership
among political and administrative officials.
The
study recommend that there is the need to move focus from employment of rent
seeking personnel to those who are knowledgeable in the field of taxation
(Garde 2004). The salary of this tax officials in charge of collection of tax
from the informal sector should be handsome to help curb unpatriotic activities
of bribery and corruption that have so destroy the tax administration in
Nigeria and the loss of confidence of the people on the tax officers and the
government in general.
