IMPACT OF TAX REVENUE ON NIGERIA’S ECONOMIC GROWTH

ABSTRACT

The  importance  of  taxation  as  a  policy  in  a  growing  economy  like Nigeria  cannot  underestimate.  It  has  become  one  of  the  popular positions of professional economists that tax revenue of any given government / nation contributes to the checks and healthy management of  its  national  governance  economically  and   improves  communal services.  This  project  has  taken  a  through  researched  process  to highlight the fact that tax generally facilitates resource and promote social equity and ensure stability of economic growth. Hence Nigeria as the  case  study  stands  to  encounter  positive  impact  on  her  domestic growth. It also took through the historical development of taxation, classification of tax and its procedure for enforcement in Nigeria. Furthermore it considered the place of taxation in an economic development, though without underrating the difficulties associated with the system in Nigeria especially as it concerns lack of conversant among citizens. The survey of Nigeria macro-economic situation and subsequent government revenue in oil and  non-oil revenue is made available to display the concrete situation on ground. Thus, the involvement of some of sort ethical values enhances the welfare of economics. The work did summarise the research area and the attended hypotheses depicting the government  revenue absence of  positive  significance.  It  is therefore, recommended that taking religious sector to educate people on their civil responsibility of tax compliance would go along way.

CHAPTER ONE INTRODUCTION

1.1     BACKGROUND TO THE STUDY

The Nigerian government like other countries of the world has legislative  powers to  impose on its citizens,  any form  of  tax  and at whatever rate it deems appropriate. Nigeria has a mixed economy i.e, government undertakes commercial investments alongside the private sector. Economists generally agree that there is a need for minimal direct government intervention through fiscal policies and instruments such as taxation, public expenditure and regulation. Thingan (1995) argues that the most potent fiscal instrument is taxation which facilitates reduction of private consumption, increasing investment and transferring resources to the government for economic development. Therefore, taxation is a compulsory   levy   imposed   by   government   to   defray   the   cost   of governance and communal services. Oloyede (2010) adds that tax facilitates resources  re-allocation,  promotion  of  social equity  through wealth distribution which enhances economic growth and development and ensures economic stability by correcting and controlling macroeconomic (both policy induced or exogenous) shocks. Aguolu (2004) posits that on the side of capitalist economic policies, the government leaves much of the commercial ventures in the private individuals. Due to certainty, universality and convenience taxation is seen to be the salient source of revenue to the government. In a social economy, only a small percentage of revenue may be derived from taxation while in a capitalist oriented economy, a greater percentage of government revenue is derivable from taxation. The income gotten from investments,   due   to   failure  of   government   companies   or   private companies (in which government holds substantial investments) may be disrupted. In nutshell, there is need for repositioning of the nation’s tax

system by the policy makers and academia. Having Nigeria as a monolithic economy filled with full dependent on the oil sector has made the economy open to external manipulation and adversely disrupts the planning in the country. Taxation is the only non exhaustible veritable source of revenue to government while oil is an exhaustible resource.

According to Adamu (2008), tax is invariably on enforced contribution of money, exact pursuit to legislative authority. Note that a fine or a penalty is not a tax; not even when the tax is imposed by a tax statute for this reason penalty for wrong parking traffic offences etc. are not taxes. Also a charge imposed for services, rendered, property hired or goods sold are not a tax. Fees payable for parking vehicles public toilets usage, night soil contracts, sewage clearing etc. are therefore nothing but payment of services. If there is no valid authority by which it is imposed, a charge is not a tax but once it is backed by written law and it has the other characteristics of a tax, it remains a tax even if it is called a toll, tribute toll gate, gabel duty, customs etc. In detecting a tax, it is better to look to essential characteristics rather than its name.

This study wishes to view the impact of tax revenue on Nigeria economic   growth   and   to   ascertain   detrimental   impact   on   totally generated revenue from taxation. It will simply draw a line between tax revenue and Nigerian economic growth; it shall also look at tax history, objective,  laws  and  regulations,  classification,  procedure  for enforcement, offences for non compliances, and role in economic development, issues and challenges of tax system in Nigeria.

1.2 STATEMENT OF THE PROBLEM

The concept of paying taxes, be it federal or state, is relatively foreign to many Nigerians. Unlike some parts of the world where almost

everyone,  regardless  of  their position or income  pays some form  of income/revenue/property taxes on a regular basis, the effectiveness of taxation in Nigeria has been affected by the following problems of the study:

1.       Collection of taxes from some Nigerians and some businesses.

2.       Lack   of   political   accountability   on   the   part   of   officials

3.       Diminish of the impact of democracy on average Nigerians.

4.       Lack  of  a  formal  tax  structure  by  state  government.  Example kano state, over rely on the federal government for income and as such the amount needed to carter for citizen’s need is limited. This is undoubtedly a serious problem during the cur

5.       Government imposition of many types of taxes.

6.     Individuals  pay  income  taxes  when  they  earn  money, Consumption when they spend, property taxes when they own a home or a land and estate when they die.

7.       Poor level of Computerisation

8.       Lack of qualified and experienced tax officials at the federal, state and local levels.

1.3 OBJECTIVES OF THE STUDY

The objectives of this study are as follows:

i.      To  ascertain  whether  tax  revenue  has  an  impact  on  Nigeria’s domestic product, and

ii.     To determine the impact of tax revenue on per capita income in

Nigeria

1.4 RESEARCH QUESTIONS

The  researcher  views  the  study  research  questions  for  a critical identification of the problems in the following:

I.  To what extent does tax revenue have positive significant impact on Nigeria’s domestic products.

II.  To what level does Nigeria tax revenue has positive significant impact in per capita income in Nigeria.

1.5 HYPOTHESES OF THE STUDY

Our hypotheses for this study are as follows;

Ho:              Tax revenue does not have positive significant impact on

Nigeria’s domestic product.

Ho:              Tax revenue does not have positive significant impact of the per capita income in Nigeria.

1.6 SCOPE OF THE STUDY

The  study  covers  tax  and  tax  revenue  as  they  concerns  Nigeria’s economic growth from 1999 to 2008.

1.7 SIGNIFICANCE OF THE STUDY

The researcher views the government tax official and the student as the relevant target group to this study.

The government tax officials will derive benefits from the study as it shows how relevant they are and the need to generate more revenue with its beneficial effect on the economy.

The study will enrich the research resources in Nigeria. The students stand to benefit a lot from the research.

1.7 OPERATIONAL DEFINITION OF TERMS

TAXATION: This is a Compulsory levy imposed by the government to defray the cost of government and communal services.

GROSS  DOMESTIC  PRODUCT:  This  is  the  market  value  of  all officially recognized final goods and services produced  or the primary indicators used to gauge the health of a countries economy. DEVELOPMENT:  This  is  the   sustained   concerted  actions  of  a policymakers to promote taxation and economic health of a specified area.

GROWTH: This is the increase in the amount of tax paid by the tax payers over time or it is the conventionally measure in percentage rate of increase in real GDP calculated in real terms.

₦5,000.00 – DOWNLOAD FULL PROJECT DOWNLOAD FULL PROJECT Added to cart

---

---

---

---

Related Project Topics :