ABSTRACT
Assessment of the
contribution of VAT to the revenue profile of Nigeria is the Works contained in
this Project. It contained an indepth evaluation of the contribution of VAT to
the revenue profile of Nigeria, the extent to which VAT proceeds impact on the revenue
profile of the Nigerian government, to determine the extent to which the
Federal government policies affect the contribution of VAT to the revenue
profile of Nigerian government, to determine the effectiveness and efficiency
of VAT administrations in Nigeria, as well as to determine the extent to which
proper public education on the importance of paying tax influence the
contribution of VAT in Nigeria. Historic data from FBIR, Enugu was used as
secondary data. Primary data were collected through questionnaire
administration prepared for the tax payers and tax officers. Personal interview
were equally conducted for some staff of FBIR, Enugu and selected tax payers
within Enugu metropolis. Correlation analysis and chi-square were used as test
techniques to test hypothesis. Infinite population formular was also used to
determine the sample size. It was observed, after series of tests that Value
Added Tax does not contribute immensely to the revenue profile of Nigeria; the
federal government policies does not affect the contribution of VAT to the
revenue profile of Nigeria government; VAT administrator are inefficient and
ineffective; proper public education on the importance of paying tax does
influence the contribution of VAT in Nigeria. Based on these findings, the
researcher recommends that the federal government should set new laws and
policies, to enhance effectiveness and efficiency in the administration of VAT
in Nigeria and also minimize the fraudulent activities of tax official.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The
increasing cost of running government coupled with dwindling revenue has left
various state governments in Nigeria with formulating strategies to improve the
revenue base. More so, the near collapse of the National Economy has created
serious financial stress for all tiers of government. Hardest hit are the state
governments all of whom have experienced unusual reduction in their share of
the National Revenue from the Federation Account. Despite the numerous sources
of revenue available to the various tiers of government as specified in the
Nigeria 1999 Constitution, since the 1970s till now, over 80% of the annual
revenue of the three tiers of government come from petroleum. However, the
serious decline in the price of oil in recent years has led to a decrease in
the funds available for distribution to the states. The need for state and
local governments to generate adequate revenue from internal sources has
therefore become a matter of extreme urgency and importance. This need
underscores the eagerness on the part of state and local governments and even
the federal government to look for new sources of revenue or to become
aggressive and innovative in the mode of collecting revenue from existing
sources.
To meet the inescapable need
for increased revenue, the use of external tax consultants was introduced by
the federal and state governments in Nigeria to boost
revenue generation under a programme known as the Accelerated Revenue
Generation (ARG) Programme. The Federal government appointed Consultants/
Monitoring agents on Value Added Tax (VAT).
Value
added tax (VAT) has become a major source of revenue in many developing
countries. VAT has become an important contributor to total government tax
revenues. Shalizi and Squire (1988) find that VAT accounted for about 30% of
total tax revenues in Nigeria in 1982. The oil producing countries are not
excluded from the list of countries introducing this tax handle. This
impressive performance of VAT in virtually all countries where it has been
introduced clearly influenced the decision to introduce VAT in Nigeria in
January 1994.
Specifically,
the Federal Inland Revenue Service (FIRS) pointed out that VAT is a consumption
tax that is relatively easy to administer and difficult to evade and it has
been embraced by many countries world-wide (FIRS, 1993: 4). Evidence so far
supports the view that VAT is already a significant source of revenue in
Nigeria.
VAT
is a multi point levy where the tax paid on local purchases from the registered
dealer can be set off against the tax payable on the sale of goods, other than
special goods. A value added tax is a tax on sales to consumers that is
collected at different stages of the production process. It has the same base
as a retail sales tax (RST) that is collected only on sales to final consumers.....
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