Effect of Tax Evasion and Tax Avoidance on Economic Development
CHAPTER ONE
RESEARCH OBJECTIVES
The main objective of this study is to asses and examines the effect of tax evasion and tax avoidance on economic growth and development. While, the specific objectives are:
- To determine the effect of tax revenue on the Nigerian economy.
- To investigate the relationship between tax rates, tax evasion, and tax avoidance.
- To determine the extent to which tax evasion and avoidance have harmed revenue generation in Nigeria.
- To examine why people evade paying tax.
- Make recommendations and offer solutions to reduce tax evasion and avoidance in Nigeria.
CHAPTER TWO
LITERATURE REVIEW
INTRODUCTION
The study aims at establishing the effect of tax evasion and tax avoidance on the development of the Nigerian economy. This chapter presents a theoretical review, which elucidates on the major theories that throw some light on this study and then presents a theoretical framework based on the theoretical review. Lastly, it presents an elaborate examination of the extent studies that relate to the research in a detailed manner.
CONCEPTUAL REVIEW
TAXATION
Tax is a notion of imposing a compulsory levy on citizens, which they must pay (ojo, 2008). It is a compulsory financial charge or some other type of levy on a taxpayer (an individual or legal entity by a governmental organization in order to fund government spending and various public expenditures (regional, Local, or national,) (Wikipedia). Tax revenues finance government activities, including public works and services such as roads and schools, or programs such as social security and Medicare.
From diverse definitions of tax from scholars and different researchers, the nature of tax of tax is noted as being compulsive and not just paying the government in return for a service. In the context of this study, we define tax as the legal means of deducting and collecting a fixed amount of money from the income of individuals by a government not as a form of punishment but for the good of both government and individuals.
CHAPTER THREE
RESEARCH METHODOLOGY
RESEARCH DESIGN
Research design answers the fundamental question of how the study objects will be brought into the scope of the research design are the case study and the survey methods. This study will use study method to investigate the impact of tax avoidance and evasion to the economic development of a nation, Abuja Internal Revenue Service’s as the case study.
It describes the instrument used in determining information from the responders, the procedure for collecting it. It involves a method of data analysis, collection method and formula. For the purpose of this research exercise, a case study approach is adopted being descriptive and evaluated in nature. The research design comprises a combination of oral interview existing data and structural questionnaire.
SOURCE OF DATA
The Primary Method: Of data collection was used for this study, this was obtained through the use of the questionnaire (a) asking people and putting their responding down.
The Secondary Method;- Was also obtain through the review of relevant literature (a) textbook, journals, articles in newspapers, government gazettes, magazines, lectures notes and information from libraries and also the tax returns at the tax authorities.
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
INTRODUCTION
DATA PRESENTATION AND RESULT
In this chapter the research presented the result of the analysis of the data collect from various respondent through the questionnaire distributed to them, the data was analyze with the use of the simple percentage technique.
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
In this chapter, an attempt is made to discuss the findings of this study, conclusion drawn and recommendation made are hoped to help to reduce, eliminate the problem at tax evasion and avoidance in the state and nation.
SUMMARY OF FINDINGS
Some findings were obtained from the questionnaire and the hypotheses are they the answers to our research question and problem.
They are as follows:
- There is effect of tax revenue on Nigerian economy
- There is relationship between tax rates, tax evasion and tax avoidance
- There is an extent has tax evasion and tax avoidance has affected negatively on generation of revenue in Nigeria
- there are possible recommendations and solutions for reducing tax evasion/avoidance in Nigeria.
CONCLUSION
Tax evasion and tax avoidance in this country, especially Abuja has been a serious problem to the revenue profit of the government to be very low and hence it earn be easily execute. It is not known how much tax lost by “artificial” as opposed or “legitimate” tax avoidance scheme or tax evasion there is little direct evidence that avoidance lead to evasion although the resentment that comes from watching others same tax may cause a decline in tax payer morality.
A proposition which leads to an examination of the tax base and of those item of income tax altogether just as much as those who escape tax through artificial devices causes more increase in the burden on other tax payer. It would be unities to leave this problem without nothing, the commit of the royal commission that the existence of widespread of tax avoid once and tax evasion an evidence that the system has the tax payers and is in need of radical reform.
RECOMMENDATION
In the light of the finding the following recommendation are made although these recommendation are not conclusion but are supplement to the already suggested measures by the federal and Abuja and other tax expect in the state.
- Tax laws should be properly implemented by pushing the offenders
- The tax law should be moderate because it is not high tax rates that generate income but a moderate rate with full enforcement.
- The internal revenue service should require some class of self employed to submit to them statement of fixed period containing details of accuracy of the tax payers returns.
- The tax authorities should organize educative program to enlighten the tax payers above the different law guiding the Nigeria tax system why he/she should pay tax and the effect of non-payment of tax.
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