Reference code: C098
ABSTRACT
This research thesis is an investigation into the tax revenue mobilization of the Nigerian government and its effects on the economic growth of the country. In order to achieve the objectives of the study, four hypotheses were formulated and tested using the ordinary least squares method of the multiple regression analyses. The results of the data analyses indicated that: taken as a unit, taxation is an important factor in economic growth. The study also showed that petroleum profit tax, company income tax and personal income tax are not statistically significant in explaining economic growth in Nigeria on the other hand, value added tax contributes significantly to the growth of the economy. On the basis of our findings, we make the following recommendations: Institutions responsible for tax revenue collection in Nigeria should be strengthened and empowered to better carry out its duties. For example, staff of such institutions should be provided with adequate training and equipment. Legal framework empowering such institutions should also be reviewed to give more teeth their effort in sanctioning tax defaulters. Efforts should be made to fully automate tax system from assessment to collection thereby getting rid as much as possible the possibility of interference by individuals. Finally, collected tax revenue should be judiciously applied in the provision of visible infrastructure and amenities. If the average tax payer is confident that his tax is applied in bettering the community, he will be more willing to pay his taxes and less willing to evade payment.
BACKGROUND TO THE STUDY
............... In a natural resources blessed country like Nigeria, also with the operation of indigenous and foreign companies, the problem of underdevelopment should not be the topic of the day. Thus the emphasis on taxation by one and all cannot be overemphasized though is just one of the avenue open to the government to generate revenue. Taxation according to Nightingale (1997) is a compulsory contribution imposed by the government on its citizens. Our quest to ensure economic growth shall meet with desired expectation if all expected tax is paid and as at when due.
From the forgoing, we can now deduce the need to garnish our understanding with contemporary knowledge in the area of Taxation, Economic growth so as tune around the fortune of our Governments.
Taxes are levied on individuals, groups, business or corporate organisation, by constituted authority for funds used by state in the maintenance of peace, security, economic growth, and social engineering among others for the benefit of the citizenry. In this view, the management of a society for effective growth rest on the government who can only discharge such responsibilities creditably to the citizenry with adequate resources.
Therefore, it behooves a responsible citizenry to discharge his/her duties to the state through prompt and regular payment of taxes. The economic history of both developed and developing countries reveals that taxation is an important tool in the hand of the government; not only to generate revenue, but also to achieve goals such as influencing the direction of investment and taming the consumption of certain goods and services. As hold by Hyman (1992) a tax is simply a compulsory payment levied on the citizens by government for the purpose of the government itself.
Traditionally, taxes are based on income of individuals or profit of an economic entity. Other bases of taxes are wealth, capital, property and consumption. All forms of consumption taxes (ail within the purview of indirect taxation. Income taxes 'and those based on capital, profit and wealth are in the realm of direct taxation.
The imposition of a tax is based on certain considerations. One of these is how effective as well as equitable the tax can be. Since tax can be equitable without being effective and vice versa, the capacity of the tax base to reflect both equity and effectiveness becomes a serious subject in taxation. Taxation as a system has been known to have existed as early as history.
Historically, taxation constitutes the oldest instrument of financing the public sector in times of either peace or war. For sacrificing their private resources to the state in the form of taxes, citizens expect the government to reciprocate by spending public revenue in a way that will enhance their welfare. This is why scholars have almost always collapsed the issue of public finance into two aspects, what Adebayo Adedeji terms "the principle of expenditure".
Similarly, economic literature shows that as far back as 1776 during the era of Adams Smith the place of taxation in public finance has caught the attention of experts like David Richardo, another classical economist who did, in fact, argue that "an economic principle could only be considered useful if it directs government to the right measure of taxation".
Richardo as well as John Stuart Mill both classical economists too had put revenue first in the division finance into three via: "revenue, expenditure and public debt". The issue is that since access to revenue is basic to the functioning of government, the sources of such revenue taxation must be prioritized. In recent years, the changes in tax- practice that have been in operation were a modification of traditional approaches by the colonial authority. These changes are majorly centered on different taxes, laws and administration.
Nonetheless, the new system introduced by the colonial authority met with stiff resistance from the people and this partly might have been due to high rate of illiteracy among the Nigeria people. The problem still persists till today while such a resistance is believed to have political undertone. James (1992) shows that one of such resistance was the "Aba Women Riot of 1929".
Thus, the imposition of direct Personal income tax by the colonial authority in Northern Nigeria through the native, the Revenue ordinance of 1917 was nothing strong to the people. Native Revenue ordinance of 1917 then became the law that guided taxation in Nigeria the ordinance of 1917, 1918 and 1928 were later incorporated into direct taxation ordinance No. 4 of 1940, which repealed the native revenue ordinance. In 1957, there was the Raisman commission ......................
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION1.1 BACKGROUND OF THE STUDY …… 1
1.2 STATEMENT OF THE PROBLEM … 7
1.3 PURPOSE OF STUDY ………… 10
1.4 RESEARCH QUESTIONS …. 10
1.5 STATEMENT OF HYPOTHESES …. 11
1.6 SIGNIFICANCE OF THE STUDY.... 11
1.7 DEFINITION OF TERMS .… 13
1.8 LIMITATION AND SCOPE OF STUDY …… 14
1.9 ORGANIZATION OF THE STUDY …… 15
REFERENCE ……… 16
CHAPTER TWO: REVIEW OF LITERATURE
2.0 INTRODUCTION ……….. 17
2.1 THEORETICAL LITERATURE …… 18
2.2 STRUCTURE OF THE TAX REVENUE SYSTEM IN NIGERIA …. 22
2.3 DIFFERENT ASPECTS OF TAXES IN NIGERIA ….. 29
2.3.1 PETROLEUM PROFIT TAX (ISSUES AND PERSPECTIVE) …. 29
2.3.2 COMPANY (CORPORATE) INCOME TAX ….. 30
2.3.3 VALUE ADDED TAX (VAT) .…. 31
2.3.4 PERSONAL INCOME TAX …. 32
2.4 PROBLEMS OF TAX EVASION …… 35
2.4.1 EXTENT OF TAX EVASION IN NIGERIA ... 36
2.4.2 REASONS FOR TAX EVASION ……… 41
2.5 HISTORICAL BACKGROUND OF NIGERIAN TAX REFORMS ….. 44
2.6 IMPACT OF TAXATION ON ECONOMIC GROWTH … 47
2.7 THE ROLE OF TAXATION ON REVENUE GENERATION IN
THE NIGERIAN ECONOMY ……… 51
2.8 TAX SYSTEM IN NIGERIA: ISSUES AND CHALLENGES … 56
REFERENCES…….. 62
CHAPTER THREE: RESEARCH METHODOLOGY
3.0 INTRODUCTION …… 68
3.1 RESEARCH DESIGN …… 68
3.2 POPULATION SAMPLING PROCEDURE AND SIZE DETERMINATION ..… 69
3.3 DATA COLLECTION METHOD ……. 69
3.4 OPERATIONAL MEASURES OF VARIABLES ... 69
3.4.1 VARIABLES IN THE MODEL …. 70
3.5 DATA ANALYSIS TECHNIQUES …. 71
REFERENCES …… 73
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.0 INTRODUCTION …… 74
4.1 DATA PRESENTATION …… 74
4.2. DATA ANALYSIS AND INTERPRETATION OF RESULTS …. 76
4.3 HYPOTHESES TESTING …… 77
CHAPTER FIVE: DISCUSSION OF FINDINGS, CONCLUSION AND RECOMMENDATION
5.0 INTRODUCTION ……. 81
5.1 DISCUSSION OF FINDINGS …… 81
5.2 CONCLUSIONS …… 83
5.3 RECOMMENDATIONS …. 84
BIBLIOGRAPHY ….. 86
APPENDICES ….. 92
Reference code: C098
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Reference code: C098
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