Effect of Education Tax and Nigeria Economy (1993 – 2022)
Chapter One
Research Objectives
The main objective of the study is to investigate the effect of education tax and Nigeria economy, and the specific objectives are:
- To access the benefits of education tax on the Nigeria economy
- To identify the problems impending the disbursement of the education tax fund
- To highlight the solutions to these problems in order to enhance tertiary institution.\
CHAPTER TWO
LITERATURE REVIEW
Conceptual review
Concept of Taxation
Taxation is central to development and provides governments with the funding they require to finance economic development and growth. In any country, developed or less developed, mobilization of resources constitutes a paramount aspect of achieving a higher level of economic growth. And, as a source of resource mobilization, the role of tax revenue is very significant in developing countries such as Nigeria. Just as developed economies regard it as primary for their development.
According to the black law dictionary, tax is a ratable portion of the produce of the property and labour of the individual citizens, taken by the nation, in the exercise of its sovereign rights, for the support of government, for the administration of the laws, and as the means for continuing in operation the various legitimate functions of the state. The Institute of Chartered Accountants of Nigeria (2006) and the Chartered Institute of Tax revenue of Nigeria (2002) view tax as an enforced contribution of money, enacted pursuant to legislative authority. If there is no valid statute by which it is imposed; a charge is not tax. Tax is assessed in accordance with some reasonable rule of apportionment on persons or property within tax jurisdiction.
Anyanwu (1997) defined tax revenue as the compulsory transfer or payment (or occasionally of goods and services) from private individuals, institutions or groups to the government. Sanni (2007) advocated tax as an instrument of social engineering which can be used to stimulate general or special economic growth. Taxation is an instrument employed by the government for generating public funds (Anyaduba, 2004). It is a required payment imposed by the government on the income, profit or wealth of individuals, group of persons, and corporate organizations.
Fasoranti (2013) ascertains that essentially, tax constitutes a means by which the government appropriates part of the private sector`s income. The revenue so derived is used to finance government expenditures. Among other things, taxation is an important instrument of fiscal policy in the economy. It generates income for the government for the funding of economic activities capable of raising the growth rate. Among other things, it is a means of redistributing income and wealth among consumers. Again, national rulers have always been interested in an income concept that can be used as a yardstick for taxation (Musgrave, 1989).
Taxation as defined by Ogundele (1999) is the process or machinery by which communities or groups of persons are made to contribute in some agreed quantum and method for the purpose of the administration and development of the society. It can be inferred that the payment of tax will in turn be beneficial to the entire citizenry. This view is similar to the definition of Soyode and Kajola (2006) who defined tax as a compulsory exaction of money by a public authority for public purposes. Nightingale (1997) described tax as a compulsory contribution imposed by the government. These various authors concluded that it is possible for tax payers not to receive anything identifiable for their contribution but that they have the benefit of living in a relatively educated, healthy and safe society.
However, the infrastructure which tax payers are supposed to enjoy is in a deplorable condition (Fafunwa, 2005). Educational system is in disarray (Obaji, 2005); and the health system is in a worrisome condition (Lambo, 2005). The World Bank (2000) noted that taxes are a compulsory transfer of resources to the government from the rest of the economy. They may be levied in cash or in-kind (for example, involving mandatory labour), and they can be explicit or implicit. Other classifications of taxes are direct or indirect (Classification by Incidence) and proportional, progressive & regressive (Classification by Burden of Distribution). Adeyeye (2004) described tax as a liability on account of the fact that the tax payer has an income of a minimum amount and from certain specified sources or that he owns certain tangible or intangible property or that he is engaged in certain economic activities which have been chosen for taxation.
Therefore, the individual contributes in some quantum measure to the funds available for use by government in providing necessary infrastructure for her citizens. It is simply a levy imposed by the government on the income, wealth and capital gains of individuals and businesses, on spending goods and services, and on properties. Taxation involves compulsion. The taxpayers are required to make payment regardless of their feelings or willingness. Once the tax has been levied, on individual has the choice of paying or not paying unless, of course, doing it illegally like tax evasion (Aderinto & Abdullahi, 2007).
According to Aneke (2009), taxes serves as an instrument of monetary strategy utilized by government to deal with the financial development of the state. The tax framework is open door for government to gather extra income required in releasing its present commitment. Government also gets involved in activities geared towards stabilization of the economy, redistribution of income, maintenance of law and order, defence against external aggression, regulation of trade and business to ensure social and economic maintenance, provision of services in the form of public goods (Abiola & Asiweh,2012).
Taxation is one of the oldest means by which the cost of providing essential services for the generality of persons living in a given geographical area is funded by government which is also saddled with the responsibility of providing some basic infrastructures for their citizens (Oladipupo & Ibadin, 2015). Tax under any jurisdiction is discriminatory. It is assessed on persons or property based on profits/income or gain, the benefit conferred on the citizens is without reference to the contributions of individual tax payers. Taxes are endogenous and dependent on one’s income. It can be divided into two forms; direct taxes: These are those levied on private individuals, corporations, and property; and Indirect Taxes: import and export duties. In a country such as Nigeria, the indirect taxes constitute the primary source of fiscal revenue. Both direct and indirect taxes are far from progressive in Nigeria.
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter introduced the description of the adopted research methodology which was applied during the study. It unravels the research design, population of the study, sample population, research instruments, instrument validity, and instrument reliability.
Research Design
According to Creswell (2016), he asserted that research design is “the process of narrowing or focusing your perspective for a particular study”; Research design can also be seen as an outline or scheme which functions as a vital framework to the researcher in his research to gather data for his study.
In research, research designs are adopted to describe how the variables of the proposed study will be discussed, controlled, or modified to collect the data needed for this investigation.
An explanatory research design would be used in this study. Explanatory research is primarily concerned with figuring out how and why things happen, as well as making predictions about what might happen in the future.
Using this method in this section was necessary because of the quantitative approach taken in the study and the nature of the research question, which calls for a conclusion about the effect of education tax and Nigeria economy (1993 – 2022)
Population of Study
The entire number of units from whom evaluation representatives are drawn is referred to as the population (Akhtar, 2016). As defined by Saunders et al. (2015), a population is the total number of cases from which a sample is selected. Using tax authorities, stakeholders and educational institutions as the research population, this research aimed to assess the effect of education tax and Nigeria economy (1993 – 2022)
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
This chapter is targeted at analyzing the data collected adopting a simple percentage and frequency presentation. The presentation is done in a tabular form for clarity and easy understanding. To get the research data, 145 questionnaires were distributed.
CHAPTER FIVE
SUMMARY, CONCLUSION, AND RECOMMENDATIONS
Summary
The study aimed to assess the benefits of education tax on the Nigerian economy, identify problems impeding the disbursement of the education tax fund, and highlight solutions to enhance tertiary institutions. In relation to the benefits of education tax, the majority of respondents agreed or strongly agreed that education tax has a low impact on the quality of education in Nigeria. However, there was a lack of consensus regarding whether education tax promotes the development of human capital and contributes to a skilled workforce. Most respondents agreed that education tax plays a role in reducing income inequality by providing equal educational opportunities for all.
Regarding the problems impeding the disbursement of the education tax fund, respondents identified lack of transparency, inadequate monitoring and oversight mechanisms, corruption and embezzlement, and political interference as key challenges. The study highlights the need for improved transparency, accountability, and effective governance in the disbursement and utilization of education tax funds to maximize their impact on the quality of education, development of human capital, and reduction of income inequality in Nigeria’s tertiary institutions.
Conclusion
the study examined the benefits of education tax on the Nigerian economy, identified problems impeding the disbursement of the education tax fund, and highlighted solutions to enhance tertiary institutions. The findings reveal that while there is a perception among respondents that education tax has a low impact on the quality of education in Nigeria, there is a lack of consensus regarding its role in promoting human capital development and reducing income inequality.
The study identified several problems impeding the disbursement of the education tax fund, including a lack of transparency, inadequate monitoring and oversight mechanisms, corruption and embezzlement, and political interference. These challenges hinder the effective utilization of the fund and compromise the achievement of desired outcomes in tertiary institutions.
To address these problems and enhance tertiary institutions, the study suggests implementing transparent processes and guidelines for disbursement, enforcing strict measures to curb corruption and embezzlement, strengthening monitoring and oversight mechanisms, and developing clear and comprehensive guidelines for the disbursement and utilization of the education tax fund.
By implementing these solutions, it is anticipated that the utilization of education tax funds will be more efficient, leading to improved quality of education, enhanced human capital development, and reduced income inequality in Nigeria’s tertiary institutions.
Recommendations
Based on the findings of the study, the following recommendations are made:
Enhance transparency: It is crucial to establish transparent processes and guidelines for the disbursement of the education tax fund. This includes ensuring clear documentation of fund allocation, utilization, and reporting mechanisms. Transparency will build trust and accountability among stakeholders and foster effective utilization of the fund.
Strengthen monitoring and oversight mechanisms: Adequate monitoring and oversight systems should be put in place to ensure the proper utilization of the education tax fund. This includes regular audits, independent evaluations, and stringent checks to detect and prevent corruption, embezzlement, and misappropriation of funds.
Enforce strict measures against corruption: To address the challenge of corruption and embezzlement, strong anti-corruption measures must be implemented. This includes prosecuting individuals found guilty of misusing or embezzling education tax funds. Additionally, robust whistleblower protection mechanisms should be established to encourage the reporting of corruption cases.
Minimize political interference: Political interference in the disbursement and utilization of the education tax fund should be minimized. There is a need for clear guidelines and regulations to ensure that the fund is disbursed and utilized based on merit and educational priorities rather than political influence. Independence and autonomy of relevant institutions involved in fund management should be upheld.
Develop comprehensive guidelines: Clear and comprehensive guidelines should be developed for the disbursement and utilization of the education tax fund. These guidelines should outline the criteria for fund allocation, eligibility for receiving the fund, and the expected outcomes and reporting mechanisms. Ensuring accountability and transparency through well-defined guidelines will promote efficient and equitable utilization of the fund.
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