The Impact of Taxation on Economic Growth in Nigeria
CHAPTER ONE
OBJECTIVES OF THE STUDY
The general objective of the study is to assess the effect that taxation has towards the development/growth of Nigerian economy.
However, the specific objective of the study includes:
- To examine the extent government has been using revenue generated by tax.
- To determine the reaction of people towards tax payment.
- To find out if tax revenue is the most effective source of government revenue.
- To examine how tax rate affects the rate of inflation, unemployment and Gross National Product (GNP).
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
There are several literatures by different authors, scholars and researchers on taxation as source of government revenue and its impact on Nigeria economy. Many of them have covered all its ramifications while some have effectively appraised the problem of tax administration in Nigeria. Despite these appreciable and commendable efforts, it should be noted that much is still need to really quantify the contributions of taxes to the growth and development of our dear country, Nigeria.
DEFINITION OF TAXATION
Anyanwu (1997) defined taxation as the compulsory transfer or payment (or occasionally of goods and services) from private individuals, institutions or groups to the government. The main purpose of taxation is to raise revenue to meet government expenditure and to redistribute wealth and management of the economy (Ola 2001; Jhingan, 2004; Bhartia, 2009). Ewa Udu (2009) defined taxation as a compulsory payment made by each eligible citizen towards the expenditure of the country. He (Ewa) added that tax is been levied by the government without regards to the specific benefit that individual tax payers may receive. The National Accountants defined taxation as a levy by public authorities on citizens within their tax jurisdictions for the purpose of obtaining compulsory payments to meet financial, social and economic goals of the authorities. According to Nzotta (2007), four key issues must be understood for taxation to play its functions in the society. First, a tax is a compulsory contribution made by the citizens to the government and this contribution is for a 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 a specific service to him or his family. Thus it is evidence that a good tax structure plays a multiple role in the process of economic development of any nation which Nigeria is not an exception (Appah, 2010).
Types of Taxation
Odoh, Nick N. (2004: 84), taxes can be conveniently classified into two categories: direct and indirect:
1) Direct Tax: These taxes are not shifted, their burden is borne by the persons or firms originally taxed. They are taxes levied on individual income, earnings from labour, rents, dividends and interest. A common feature of this type of tax is that it is levied based on the ability to pay, that is “Pay As You Earn” (PAYE). In Nigeria, direct taxes are classified into the following:
CHAPTER THREE
DESIGN AND METHODOLOGY
The study is a sample data collected from Enugu South Local Government Area of Enugu State of Nigeria. A letter of introduction containing the research topic and the purpose of the study was given to the local government concerned. During the course of the study, the researchers carried out field study on their activities. The primary field study was aimed at finding out the various ways in which taxation is employment. To achieve this aim, various research techniques and strategies will be used by the researchers to carry out the study in an organized manner to arrive at their conclusion. The investigation strategy the researchers adopted at its preliminary study were oral interview, observations and distributed questionnaires to some employees and staff and few top management officials including the accountants, employees of the Federal Board of Inland Revenue Service.
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF DATA
INTRODUCTION
In chapter, the researchers intend to analyze the data collected in chapter three. It should be necessary to point out that the researchers generated data through oral interview, questionnaire and already made materials.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
SUMMARY OF THE FINDINGS
The main objective of the study was to examine the aims and objectives of taxation and its impact on Nigeria Economy. It was also aimed at identifying the problems that inhabits the efficient and effective administration of tax and its impact on the economy of Nigeria.
In the course of this study, various literatures were viewed to provide a theoretical frame work to the study while field survey was carried out to get the applicability of the study from the theoretical and practical aspect of the study, it was observed that the issue of taxation evokes response in this study country.
CONCLUSION
Effort has been made in this study to examine the impacts of taxation as aid to on Nigeria Economy. Various data were gathered and analyzed to determine the reliability of the formulated hypothesis.
The study showed that in some countries, taxation is the most significant source or revenue to the country. In Enugu (Nigeria), it was noted that taxation is the second most significant source of government revenue after crude oil. This is the more reason why taxation should be taken more seriously.
RECOMMENDATIONS
Going by the finding of the researcher, the following suggestion and recommendation are made which he believes will increase tax revenue as well as eliminate administrative problems:
- Staff Training: The tax official needs improvement through adequate training and provision of suitable working materials and facilities.
- Government Programme: Government should distribute its social welfare programmes in such a way as to provide direct benefit to tax payers. This makes them believe that the portion of their hard earned money paid for purposes, is being effectively utilized by the government.
BIBLIOGRAPHY
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