THE EFFECT OF TAXATION AS AN AID TO ECONOMIC DEVELOPMENT
(A CASE STUDY OF OJI RIVER LOCAL GOVERNMENT, NIGERIA)
ABSTRACT
The purpose of this research work is to study the effect of taxation as an aid to economic development and my study is based on the survey of Enugu State, using Oji River as a case study. This research also became necessary in order to bring to the proper understanding of the enquirer the best ways to solve such problems connected with the taxation especially: what is taxable, which system of tax is acceptable, the rate of tax evasion and avoidance and the assessment of Nigeria tax system. In the course of this study various literature were reviewed to provide a theoretical framework to the study while field survey was carried out to get the applicability of the study. The data for the research work came from both primary and secondary source. The primary data include the use of oral interview and distribution of designed questionnaires to management and staff of manufacturing firms. The data collected were tested and analyzed using the major findings by the researcher which includes that of observation of the issue of taxation which involves many responses in the country. People feel reluctant to pay taxes, some try to avoid it, while other will not like to see the tax collectors not to talk of paying taxes. The following suggestions and recommendation were made which the researcher believes will increase tax revenue as well as eliminate administrative problems. The tax officials need improvement through adequate training and provision of suitable working materials and facilities.
TABE OF CONTENTS
CHAPTER ONE
1.0 Introduction
1.1 Background of the study
1.2 Statement of the problem
1.3 Objectives of the study
1.4 Research Questions
1.5 Significance of the Study
1.7 Definition of Terms
CHAPTER TWO
2.0 Review of Related Literature
2.1 Introduction
2.2 Definition of Tax and Types
2.3 Incidence of Taxation
2.4 Principle of Taxation
2.5 Structure of Administration of Nigeria
2.6 Structure and Composition of the Board
2.7 Problems of Taxation
2.7 Function of Taxation
CHAPTER THREE
3.0 Design and Methodology
3.1 Research Design
3.2 Area of the Study
3.3 Population of the Study
3.4 Sampling Method
3.5 Research Instrumentation
3.6 Validity and Reliability of Research Instruments
3.7 Methods of Investigation
CHAPTER FOUR
4.0 Presentation of Analysis of Data
4.1 Presentation of Related Data
4.2 Analysis of Data
CHAPTER FIVE
5.0 Summary of Findings
5.1 Conclusions
5.2 Recommendations
Bibliography
Questionnaire
CHAPTER ONE
1.0 INTRODUCTION:
1.1 BACKGROUND OF THE STUDY:
One of the major functions of any government especially developing countries such as Nigeria is the provision of infrastructural services such as electricity, pipe-borne water, hospitals, schools, good roads and as well as ensure a rise in per capita income, poverty alleviation etc.
For these services to be adequately provided, government should have enough revenue to finance them. The task of financing these enormous responsibilities is one of the major problems facing the government. Based on the limited resources of government, there is need to carry the citizens (governed) along hence the imposition of tax on all taxable individuals and companies to augment government financial position. To this end, government have always enacted various tax laws and reformed existing ones to stand the taste of time. They include: Income Tax Management Act (ITMA), Companies Income Tax Decree (CIID), Joint Tax Board (JIB) etc.
All these are aimed at ensuring adherence to tax payment and discouraging tax evasion and avoidance. For the purpose of this study, the researcher would be concerned with the impact of taxation as an aid to the economic development of Enugu State (Nigeria).
1.2 STATEMENT OF THE PROBLEM:
This research work “The effect of taxation as an aid to economic development has problems which the researcher has seen and wish to make an input below are some of the problems.
Inadequate administration of taxation by Oji River Local Government of Enugu State has adversely affected growth and development of the local government.
Tax evasion by divers firms in the local government has also incapacitated the local government from effectively carrying out its development projects in the area.
Ineffective implementation of tax policies by the local government contributes to ineffective taxation administration which invariably affects the development of the local government.
Corruption which has eaten into virtually all sectors of Nigeria economy has also affected effective tax administration in the local government.
1.3 OBJECTIVE OF THE STUDY:
The specific objectives of this study includes the following
1.4 RESEARCH QUESTIONS
The following research questions are formulated for the purpose of this research study.
1.6 SIGNIFICANCE OF THE STUDY:
One of the most frequently discussed issues in Nigeria is how to solve the economic hardship in the country and how to create an industrial base that can be guarantee self sustaining economic development. Also one wonders why a country which is richly endowed with the necessary human and material resources and which the people pay tax has been turned a heavily indebted country.
The study will afford us the opportunity to know the roles taxation play in the Enugu State economy such roles includes:
1. Taxation is a major source of revenue to the government.
2. Revenue generated from tax enables government performs its functions effectively.
3. Taxation acts as an instrument of fiscal policy.
4. The effect of tax on small business in the state.
5. The study will in addition reveal if there are other better sources of government funding.
1.9 DEFINITION OF TERMS:
Tax: A compulsory levy by the government on its citizen for the provision of public goods and services.
Tax Rate: The rate at which tax is charged.
Tax Base: The object which is taxed for instance personal income, company profit.
Tax Incidence: It offers to the effect of and where the burden is finally rested.
FBIRS: Federal Board of Inland Revenue Services. It is an operational arm of Federal Board of Inland Revenue which is responsible for the Federal Tax matters.
CITA: Company Income Tax Act (CITA) is a federal law operated by the FIRS, which deals with the taxation of all limited liability companies in Nigeria with the exception of those engaged in petroleum operations.
JTB: Joint Tax Board (JTB) is established under Section 85(1) of Decree 104 of 1993 to arbitrate on tax disputes between one state tax authority and another.
VAT: Value Added Tax is a multistage tax levied and collected on transactions at all stages of sales and distribution.
CGTA: Capital Gain Tax Act is an act that stipulates that all capital gains arising on disposal of asset of individual partnership and limited companies should be taxed.
PPTA: Petroleum Profit Tax Act is an act that regulates the petroleum profit tax and also specifies how profit from petroleum will be taxed.
Withholding Tax: This is tax charged on investment income namely: rents, interest, royalties and dividends, presently it is charged as the tax offset.
Progressive Tax: This is a tax incidence that increases as the size of income increases.
Regressive Tax: A tax is regressive when its tax rate decreases as the income increases.
Excise Duties: These are taxes on some goods manufactured within a country.
Persons: It includes all taxable persons whether it be individual or corporate bodies.
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