Impact of Taxation on Economic Development in Nigeria

Impact of Taxation on Economic Development in Nigeria

CHAPTER ONE

Objective of the study

The objectives of the study are;

To ascertain the effect of profit tax revenue on economic development of Nigeria
To ascertain the effect of Company income tax revenue on economic development of Nigeria
To ascertain the effect of Value added tax revenue on economic development of Nigeria

CHAPTER TWO

REVIEW OF THE RELATED LITERATURE

Concepts of Taxation

Tax is a compulsory levy made by all concerned to the government of a country from which essential services are rendered, without necessarily offering an explanation on how the money generated was spent or equating the services with the money collected. It is an instrument employed by the government for generating public funds (Anyaduba, 2004; Ofoegbu, et al. 2016). Paina (2003) reiterated that taxation isa required payment imposed by the government on the income, profit or wealth of individuals, group of persons, and corporate organisations. A well-designed tax system can help government in developing countries prioritise their spending, build stable institutions, and improve democratic accountability (Brautigam, 2008).When that is achieved the people will be consciously motivated to pay their taxes. Taxescan be used as an instrument for achieving both micro and macroeconomic objectives especially in developing countries such as Nigeria. Ola, (2001) noted that tax policy serve as an instrument of redistribution of wealth to ensure social justice. Summarily, Nzotta (2007) documented four basic issues for taxation to play its functions in any society. First, a tax is a compulsory contribution made by the citizens to the government and this contribution is for general common use. Secondly, a tax imposes a general obligation on the tax payer. Thirdly, there is a presumption that the contribution to the public revenue made by the tax payer may not be equivalent to the benefits received. Finally, a tax is not imposed on a citizen by the government because it has rendered specific services to him or his family. Consequently, a good tax structure plays a multiple role in the process of economic growth and development of any nation which Nigeria is not an exception (Appah, 2010). Economic growth is the increase in the value of goods and services produced by a country over a period and Real Gross Domestic Product (Rgdp) is used as a proxy for economic growth. Real gross domestic product is an inflation-adjusted measure which reflects the value of all goods and services produced by an economy in a given year, usually expressed in base-year prices, and is often graded as constant-price or inflation-corrected GDP.

CHAPTER THREE

RESEARCH METHODOLOGY

INTRODUCTION

According to Okafor, methodology is a system used in carrying out a research, the research methodology employed refers a methods use in carrying out a study so as to achieve its major objective.

This chapter consists of the methods and procedures used in carrying out the research study. It contains the design of the study, population of the study, sample and the sampling technique, instrument for data collection, administration of techniques of data analysis, and decision role.

AREA OF THE STUDY

The specific purpose of the study was to determine impact of taxation on economic development in Nigeria and it particular emphasis on the internal revenue service, Uyo, Akwa Ibom State as the study area.

POPULATION OF THE STUDY

Internal Revenue Service, Uyo, constitute of fifty-five (55) staff. Hence, the researcher considers this much to be the population for the study.

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS

INTRODUCTION

This chapter focuses on presentation analysis and interpretation of primary data collection during the survey.

TEST OF HYPOTHESIS

H₀: there is no effect of taxation on economic development of Nigeria

H₁: there is effect of taxation on economic development of Nigeria

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

INTRODUCTION

This chapter is devoted to brief summary of work carried out fellow it conclusion and recommendation that would enable the citizen to know the importance of taxation and the internal revenue service, Uyo to improve on tax administration.

SUMMARY

The summary is for quick understanding of the main point raised in the research project. From the various literature review, it is generally accepted that tax is a compulsory payment imposed by the Government on the people within its territory, it also a contribution to defray the country in terms of provision of goods and social services, such as Hospital, School, public utility services etc.

It is also clear that tax is not levied in return for any specific services rendered by the Government to the tax payers, hence a tax payer cannot claim for something equivalent to the tax paid.

From the research, the researcher observed that the role of taxation has they affect the development of Nigeria’s economy to include revenue generation, production and control of the consumption of certain goods, redistribution of the nation wealth stabilization of the national economy.

Taxes helps Government pays roads construction, environmental protection and control, Health care for people that need it and help pay for many function of the Government that citizen use and need.

Finally, Government should tax money for the most important necessities and not over tax individual because the economy is hurting.

CONCLUSION

You might be wondering why we have to pay taxes to the Government, when it has the power to issues as much money has it needs. What are the uses of our taxes for them?

Well, while the Government may seems to have a bottomless reserved of money, it actually need a good and stable financial resources to manage a whole nation. The revenue from the domestic taxes provides this, without it, the services offer to all citizens could not effectively managed.

The Government uses the revenue to public health care, social security, national defense, free elementary education, public housing and may other social services. The taxes we pay fuel our society, supporting all our needs including police protection, fire emergency services, garbage services, etc. Thus, as a responsibility, we should pay our dues to the Government.

RECOMMENDATION

In other for tax to be effective, they should be seriousness on the part of Government in handling tax matters / issues. A lot of people should be educated in terms of taxation.
The Government and the internal revenue service should undertake a comprehensive mass education on the need for tax payment. Tax payer should be made to understand that payment of tax is a civil responsibility.
Apart from mass education on the need for the payment they should be a periodic workshop and seminar to improve staff productivity and there should be some in service training for staff to acquired the specialized skills for the man power needs of the board of internal revenue service.
There should be adequate statutory protection given tax authorities, also the should be empower to arrest defrauders and necessary to expound properties in settlement of tax liabilities.
Finally, social and economic services should be provided to the citizens at the rural areas such as good road network, Electricity, pipe borne water and schools so that they will see the need to pay their taxes. This will give the inhabitant as interest in proper usage of their taxes.

References

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