Effect of Taxation Policies on the Property Market Transaction
CHAPTER ONE
- OBJECTIVE OF THE STUDY
To achieve the aim the following objective are set:
- 1 To identify the various taxation policies of government that impinges on the property market in Auchi
- To asses the impact of these policies on the property market.
- To examine the issue and changes of these policies as they apply to the transaction of the property market in area.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
Governments exist to serve the social interests of her subjects. To effectively discharge this duty, efforts are being made to situate governance right in the grassroots of the territorial districts of states. This gives rise to the need for finance both from within the local governments and from sources outside the local governments. Collection of taxes is one of the formidable options to generate revenue and this is what brings about taxation. A tax is a fee charged or levied by a government on a product, income, or activity taking place within its territorial boundary. The main reason for taxation is to finance government expenditure and to re-distribute wealth which translates to financing development of the state or region (Ola, 2001; Jhinghan, 2004; Bhartia, 2009). Hence, tax revenue refers to receipts from tax structures. Prepared in 2002 and taken effect on January 22 2010, the National Tax Policy (NTP) is a document which is essentially about taxation and other ancillary matters connected with taxation. It stipulates what constitutes taxation and distinguishes it from revenue. Consequently, the document on one hand defines tax as “a financial charge or levy imposed upon an individual or legal entity by a state or component of a state”. By this definition, a tax is a monetary charge on a person’s or entity’s income, property or transaction and is usually collected by a defined authority at any of the three tiers of government. On the other hand, revenue is defined as “income received from all activities engaged in by the receiving entity” (NTP, 2002). In government terms, revenue is the entire amount received by the government from sources within and outside the government entity. Revenue therefore encompasses the entire gamut of government income, which is realised and available for expenditure by government within a particular fiscal year or period. Owing to the foregoing, we deduce that taxes are a sub-component of government revenues, but they are not the only revenue item which is internally generated by government. Other sources of internal revenue include fees, rates, levies, fines, tolls, penalties and charges. Taxes are, however, a major contributor to government revenue and ideally present a major source of revenue. The present structure of taxation as stipulated by the constitution of the Federal Republic of Nigeria reflects the three-tier system of government at the Federal, State and Local Government levels. Under the constitution, each tier of government has been granted powers and responsibilities in respect of the imposition and collection of taxes. Tax heads in the exclusive legislative list are outside the jurisdiction of local government councils whereas activities that would ordinarily attract taxes, fees and charges (forms of levies) are placed squarely as part of the responsibilities of the Local Government Council and this is set out in the Fourth Schedule of the Constitution of Federal Republic of Nigeria. In this regard, state and Local Governments are allowed to employ their broad discretion in establishing fees, charges or fines keeping in mind the purpose for imposing such payments. For the purpose of clarity, there are three relevant tax authorities in Nigeria with capacity to collect various designated taxes: the Federal Inland Revenue Service (FIRS) collecting taxes on behalf of Federal Government; the State Boards of Internal Revenues (SBIR) collecting State taxes and the Local Government Revenue Committee (LGRC) which serves the Local Governments. Consequently, similar to the other tiers of government, Local Governments have constitutional power to assess, impose or levy taxes; collect, account for such taxes and utilise same for the administration of government activities as stipulated by the constitution (Ogbonna, 2010). Indeed, the NTP creates awareness on the importance of the role which taxation can play in securing a stable flow of revenue for even the local government councils. In an era when Nigeria is regarded as a single product economy due to its significant dependence on oil revenue for over four decades, taxation has been identified as a more dependable source of revenue due to its perpetual nature.
CHAPTER THREE
RESEARCH METHODOLOGY
- Introduction
This chapter deals with the method used in collecting data required in carrying out this research work it explains the procedures that were followed and the instrument used in collecting data.
- Sources of data collection
Data were collected from two main sources namely:
Primary source and Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment, the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to evaluate the effect of taxation policy on property market transaction in Auchi metropolis in Edo state.
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of tax policies on property market transactions.
Summary
Revisiting the interaction between the Nigerian property market and the macro-economy has further confirmed that the use of econometric analysis rather adhoc methodologies purged with simple trend interpolations is plausible. Since residential property rent is a significant feature of most property market in the world, empirical evidence based on this study from Nigeria implies that exogenous influences of the economy (real GDP and Exchange rate) account for 31.4% of the variation within the residential property market. At a disaggregate level, real GDP accounts for a substantial proportion of this variation in the residential property market, while exchange rate account for the remaining of these residential property market variance. In addition the feedback mechanism between GDP and residential property rents, means that these two variables are determined contemporaneously and by implication depicts a somewhat limited integration of the Nigerian residential property market with the economy. The one to two period(s) response shocks of interest rate, real GDP, and exchange rate show a relatively slow adjustment of the market to the ever changing macroeconomic events in Nigeria. Such responses are exogenous and make long run equilibrium within the residential property market almost elusive. The existence of such analysis of this nature will in the end aid useful property market analysis in a market fraught with poor property market data.
Conclusion
The findings shows that tax policy have significant effect on economic growth. The various component have different effect on economic growth, the result showed that indirect tax have a strong positive significant relationship with the level of economic growth in Nigeria within the period under review. Direct tax analysis result showed a weak relationship between economic growth and direct tax policy (CIT, PPT). The study thus conclude that it is important for Government to strengthen the indirect tax and shift more to indirect tax as it offer more growth prospect and less cost and administration challenges.
Recommendations
The study recommends as follows:
That the government should improve the tax administrative system so as to block possible tax evasion by appropriate by policing of exports and import.
Lowering the company income tax rate further to encourage more investment to broaden the tax base and promote economic growth.
Government should broaden the tax base by providing the basic infrastructure and enabling environment for private enterprise to strive. Prudent management and productive utilization of public fund should be encouraged.
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