ABSTRACT
The importance of taxation as a
policy in a growing economy like Nigeria cannot underestimate. It has become
one of the popular positions of professional economists that tax revenue of any
given government / nation contributes to the checks and healthy management of
its national governance economically and improves communal services. This
project has taken a through researched process to highlight the fact that tax
generally facilitates resource and promote social equity and ensure stability
of economic growth. Hence Nigeria as the case study stands to encounter
positive impact on her domestic growth. It also took through the historical
development of taxation, classification of tax and its procedure for
enforcement in Nigeria. Furthermore it considered the place of taxation in an
economic development, though without underrating the difficulties associated
with the system in Nigeria especially as it concerns lack of conversant among
citizens. The survey of Nigeria macro-economic situation and subsequent government
revenue in oil and non-oil revenue is made available to display the concrete
situation on ground. Thus, the involvement of some of sort ethical values
enhances the welfare of economics. The work did summarise the research area and
the attended hypotheses depicting the government revenue absence of positive
significance. It is therefore, recommended that taking religious sector to
educate people on their civil responsibility of tax compliance would go along
way.
CHAPTER
ONE
INTRODUCTION
1.1 BACKGROUND
TO THE STUDY
The Nigerian
government like other countries of the world has legislative powers to impose
on its citizens, any form of tax and at whatever rate it deems appropriate.
Nigeria has a mixed economy i.e, government undertakes commercial investments
alongside the private sector. Economists generally agree that there is a need
for minimal direct government intervention through fiscal policies and
instruments such as taxation, public expenditure and regulation. Thingan (1995)
argues that the most potent fiscal instrument is taxation which facilitates
reduction of private consumption, increasing investment and transferring
resources to the government for economic development. Therefore, taxation is a
compulsory levy imposed by government to defray the cost of governance and
communal services. Oloyede (2010) adds that tax facilitates resources
re-allocation, promotion of social equity through wealth distribution which
enhances economic growth and development and ensures economic stability by correcting
and controlling macroeconomic (both policy induced or exogenous) shocks. Aguolu
(2004) posits that on the side of capitalist economic policies, the government
leaves much of the commercial ventures in the private individuals. Due to
certainty, universality and convenience taxation is seen to be the salient
source of revenue to the government. In a social economy, only a small
percentage of revenue may be derived from taxation while in a capitalist
oriented economy, a greater percentage of government revenue is derivable from
taxation. The income gotten from investments, due to failure of government
companies or private companies (in which government holds substantial
investments) may be disrupted. In nutshell, there is need for repositioning of
the nation’s tax
According to
Adamu (2008), tax is invariably on enforced contribution of money, exact
pursuit to legislative authority. Note that a fine or a penalty is not a tax;
not even when the tax is imposed by a tax statute for this reason penalty for
wrong parking traffic offences etc. are not taxes. Also a charge imposed for
services, rendered, property hired or goods sold are not a tax. Fees payable for
parking vehicles public toilets usage, night soil contracts, sewage clearing
etc. are therefore nothing but payment of services. If there is no valid
authority by which it is imposed, a charge is not a tax but once it is backed
by written law and it has the other characteristics of a tax, it remains a tax
even if it is called a toll, tribute toll gate, gabel duty, customs etc. In
detecting a tax, it is better to look to essential characteristics rather than
its name.
This study
wishes to view the impact of tax revenue on Nigeria economic growth and to
ascertain detrimental impact on totally generated revenue from taxation. It
will simply draw a line between tax revenue and Nigerian economic growth; it
shall also look at tax history, objective, laws and regulations,
classification, procedure for enforcement, offences for non compliances, and
role in economic development, issues and challenges of tax system in Nigeria.
1.2
STATEMENT OF THE PROBLEM
The concept
of paying taxes, be it federal or state, is relatively foreign to many
Nigerians. Unlike some parts of the world where almost everyone,
regardless of their position or income pays some form of
income/revenue/property taxes on a regular basis, the effectiveness of taxation
in Nigeria has been affected by the following problems of the study:
1.
Collection of taxes from some
Nigerians and some businesses.
2. Lack of political accountability on the part of officials
3.
Diminish of the impact of democracy
on average Nigerians.
4.
Lack of a formal tax structure by
state government. Example kano state, over rely on the federal government for
income and as such the amount needed to carter for citizen’s need is limited.
This is undoubtedly a serious problem during the cur
5.
Government imposition of many types
of taxes.
6.
Individuals pay income taxes when
they earn money, Consumption when they spend, property taxes when they own a
home or a land and estate when they die.
7.
Poor level of Computerisation
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