Taxation as a Tool for Economic Development of Nigeria
CHAPTER ONE
OBJECTIVE OF THE STUDY
The objectives of the study are;
- To examine taxation as a tool for economic development in Nigeria.
- To find out whether taxation contributed to the development of Nigeria economy.
- To examine the role of taxation for economic development of Nigeria.
- To find out the importance of taxation in the development of an economy through proper use of its tools.
- To make possible recommendations based on the findings of this research work.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
Taxation plays a very important role in the economic life of a developing country like Nigeria. Today, Nigeria is indeed in dire need of effective and efficient tax system in order to generate enough revenue that will stimulate economic growth and development (Oji, 2000). “One man’s meat, they say, is another man’s poison. Though taxation may be seen as a threat to individual’s proposed standard of living or even business proposed revenue generation, but to the government and the fiscal need for taxation, it is the pillar and facilitator of development” (Business Day, August 13, 2007, pg. 29). Nwabueze (2000) in his paper presentation on the topic “stimulating economic growth through an efficient tax system” asserts that the use of tax in national development is increasing and that further introduction of new technology will ensure its continued growth and influence in stimulating economic growth and development. He stressed further that “the real purpose of taxation is to take purchasing power from tax payers so that tax payers relinquish control over economic resources and make them available to state. In this direction taxes have an important effect on the redistribution of income among the poor and better-off household of the community”. One of the objectives of taxation is to ensure the redistribution of income and wealth (Olakunrin, 2000). Thus, taxation is used as a tool to achieve socially desirable goals (Olakunrin, 2000). Olakunrin stressed further in a talk delivered by her during the second Annual Tax conference of the Chartered Institute of Taxation of Nigeria (CITN), that taxes are generally based on the principle of ability to pay and that citizens who are well endowed invariably assessed for more taxes than their less fortunate compatriots. According to her, the taxes paid by the rich are used by government to provide social amenities for the poor. This is the essence of the principle of progressive tax that seeks to reduce inequality and redistribute income and wealth. How effective is taxation as a tool for income redistribution? How is taxation being used as a tool to bridge the gap between the rich and the poor? Has taxation being fully employed to facilitate economic development in Nigeria, particularly among Lagos State civil servant? There are the questions that triggered this research. However, tax means almost the same thing to everybody, be it layman or a professional, the only difference is in the definitions.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought taxation as a tool for economic development of Nigeria
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 ascertain taxation as a tool for economic development of Nigeria. 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 taxation as a tool for economic development of Nigeria
Summary
This study was on taxation as a tool for economic development of Nigeria. Four objectives were raised which include: To examine taxation as a tool for economic development in Nigeria, to find out whether taxation contributed to the development of Nigeria economy, to examine the role of taxation for economic development of Nigeria, to find out the importance of taxation in the development of an economy through proper use of its tools, to make possible recommendations based on the findings of this research work. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of federal Inland Revenue service, Uyo, Akwa Ibom state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made of tax managers, assistant tax managers, officers i and officers ii were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
The findings of this study contribute towards a better understanding of tax revenue and economic growth in Nigeria. GDP and four other variables that represent petroleum profit tax, company income tax, custom and excise duties, and value added tax were developed to test which factors best describes economic growth in Nigeria. The result shows that petroleum profit tax, company income tax, custom and excise duties, and value added tax are significant variables in explaining the economic growth in Nigeria. Out of all the four independents variables, it is only custom and excise duties that shows a negative relationship with economic growth which implies that they are both moving in inverse direction. The remaining three independent variables show a positive relationship with economic growth. The implication of our findings is pointing majorly at policy makers, especially the Federal Board of Inland Revenue as most of our variables shows a positively significant relationship with economic growth, meaning that there should be no area in tax collection that should be taken lightly as they have all proven to be a major variable in connection to the growth of the economy. Also, for researchers, the study will re-introduce them to a different direction of ways in which tax revenue can contribute to the economic growth in Nigeria and add to the existing literatures on this subject matter and also ensure that the regulatory body implement policies that will reduce the loop holes in tax laws which tax payers capitalize on to evade tax. One of the main purposes of tax revenue is to raise revenue that the government can use to provide adequate amenities and infrastructure for its citizens as well as enhance growth and development but the case seems to be different in Nigeria as the physical evidences does not show that funds generated from tax revenue are used for this purpose. Our analysis has thrown some light on the impact of tax revenue on Nigeria‘s economy. It is glaring that the Nigerian total tax revenue generated has a significant impact on the economy in general
Recommendation
The following recommendations emerged from the findings and conclusions of the study:
- The introduction of the Tax Identification Number (TIN) which is a registration and storage of tax payers‘data in Nigeria is a welcomed idea but for it to be successful it should be structured in such a way that will make all potential tax payers liable. Citizens and companies should be able to operate bank accounts only if they have TIN numbers. Government parastatals, multinationals, conglomerates and companies in the country should not engage any vendor who does not have a TIN number. This will go a long way in reducing Tax evasion.
- The tribunal recommended by the Tax Act 1993 should be established to reduce cases of tax evasion and remittance of tax collections especially custom and excise duties which reported a negative impact on GDP. Only professionals and trustworthy hands should be responsible for tax administration.
- All taxes should be remitted via an e-payment system or via direct payment to the various tax authorities‘accounts. This will enhance and support the cashless economy system introduced recently.
- Tax Clearance Certificates and other tax documents used in government transactions should be referred back to the relevant revenue authority for authentication.
- The government should ensure that taxes are accounted for to the public via print and electronic media. The intent of government with such tax should be communicated to the general public. In so doing, a separate body should be set up to inspect and ensure that the funds generated by government through tax at each level of government is properly used and any level of government that fails to utilize such taxes as communicated to the public should be charged to court.
REFERENCES
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