The Impact of Taxation on Economy Growth: A Case Study of Ogun State Internal Revenue Service
Chapter One
Objective of the study
The objectives of the study are;
- To ascertain the effect of profit tax revenue on economic growth of Ogun state
- To ascertain the effect of Company income tax revenue on economic growth of Nigeria
- To ascertain the effect of Value added tax revenue on economic growth 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. Unlike nominal GDP, real GDP can account for changes in price level and provide a more accurate figure of economic growth.
Principle of taxation
A good tax system is based on sound principles, these principle are sometimes called cannons.
The Principle of Certainty: tax payer is certain about what is expected to pay and the Government also, ascertains on the extents of revenue they should expect tax over a particular period, Bassey (2000).
In other, the principle after the controversies with other principles since there are illustrated tax payer who cannot ascertain what amount they should pay at a particular period of time. Moreover, some individual evade of tax such that the Government cannot attain the amount of revenue she proposed as at the time speculated.
The Principle of Equity: According to living stone, a good tax system should not offend popular nations of fair play or equality of treatment before the law. There should be horizontal equity or like treatment of equal with the same level of income and circumstances. this principle is also questionable since some individual evade tax and it is often easier for certain group to avoid taxes legally be cleaning allowance or special concessions not available to other group with some income.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine the impact of taxation on economy growth. Internal Revenue Service, Uyo forms the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain the impact of taxation on economy growth. A case study of Ogun state internal revenue service. 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 Teachers Qualification On Students Performance in Mathematics
Summary
This study was on the impact of taxation on economy growth. A case study of Ogun state internal revenue service. Three objectives were raised which included; To ascertain the effect of profit tax revenue on economic growth of Ogun state, to ascertain the effect of Company income tax revenue on economic growth of Nigeria and to ascertain the effect of Value added tax revenue on economic growth of Nigeria. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from Internal Revenue Service, Ogun state. Hypothesis was tested using Chi-Square statistical tool (SPSS).
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
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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