Accounting Project Topics

Taxation as a Major Source of Revenue in Nigeria

Taxation as a Major Source of Revenue in Nigeria

Taxation as a Major Source of Revenue in Nigeria

Chapter One

Aim and Objectives of the Study

The broad objective of this study is to critically assess Taxation as a major source of revenue genera in Nigeria, using Lagos Internal Revenue Scheme as a study, specifically, the study will also to:

  1.  determine the extent taxation has contributed to revenue generation in Nigeria
  2.  examine the extent taxation has contributed to the steady growth in Gross Domestic Product in Nigeria
  3. determine how Nigeria can revolutionalize her tax system to boost revenue generation through this source
  4.  determine sources of tax in Nigeria.




In this chapter, the research team presents a comprehensive account of theories on income tax and its effect on the economy.

Taxation policy and practice” by Dora Hancock, defined “Tax as a compulsory levy, imposed by government, on income, expenditure or capital assets, for which the tax payer receives nothing in return”

Organization of Economic Co-operation and Development (OECD) on a debate concluded that the term tax could be “confined to compulsory unrequited payment to government”. From the above definition, one can draw the following conclusion or implications:

Tax is an imposition

It is a compulsory levy

Tax is a no quid pro qua payment to the tax payer

It involves capital or funds outlay

Taxation is a compulsory levy and an imposition by the government or the authority that be. Hence the team has no other choice than to state that “tax is a payment forced down the throat of the tax payer by the powers that be. The conclusion drawn from this exposition is that, taxes have been and still continue to be a vexatious issue because one can cite several instances of peoples’ resentment to taxes.


Taxes are considered a problem by everyone. Not surprisingly, taxation problems date back to earliest recorded history.

During the various reins of the Egyptians pharaohs tax collectors were known as ‘scribes’. During a period the scribes imposed a tax on cooking oil. To insure that citizens were not avoiding the cooking oil tax scribes would audit households to insure that appropriate amounts of cooking oil were consumed and that citizens were not using leavings generated by other cooking processes as a substitute for the tax oil.

In times of war the Athenians imposed a tax referred to as ‘eisphora’. No one was exempt from the tax which was used to pay for general wartime expenditures. The Greeks are one of the few societies that were able to rescind the tax once the emergency was over. Athenians also imposed a monthly poll tax on foreigners, people who did not have both Athenian mother and father.

The earliest taxes in Rome were customs duties on imports and exports called ‘portoria’. Caesar Augustus was considered by many to be the most brilliant tax strategist of the Roman Empire. During his reign cities were given the responsibility for collecting taxes instead of the publican and also instituted an inheritance tax to provide retirement funds for the military. Saint Matthew was a tax collector from Capernaum during Caesar Augustus reign. Income tax was announced in Britain by William Pitt who is often referred to as the father of income tax in his budget of December 1798 and introduced in 1799, to pay for weapons and equipment in preparation for the Napoleonic wars. The tax was repealed in 1816 and opponents of the tax who thought it should only be used to finance wars wanted all records of the destroyed along with its repeal.

Taxation can be explained from the administrative perspective. It is easier to tax import goods than domestic output. Import duties were among the earliest taxes. Similarly, the simple turnover tax (levied on gross sales) long held precedence over the conceptually preferable value added tax.

Taxes played relatively minor role in the ancient world and taxes on consumption were levied in Greece and Rome. Tariffs on imported goods were often of more considerable importance than internal excise duty so far as the production of revenue went. Later taxes on property were imposed temporarily and were confined to real property and later extended to cover other assets.

During the latter parts of the middle ages, some German and Italian cities introduced several direct taxes such as head taxes for the poor. Indeed, taxes have been a major subject of political controversy throughout history, even before they formed a sizeable part of the national income. A notable instance is the rebellion of the American colonies against Great Britain when the colonies refused to pay taxes imposed by parliament in which they have no voice, hence the slogan “No taxation no representation” raised by James Otis in 1764 according to Stanley L.Klos book (Economic Home Run, 1999). Payment of tax especially income tax is not a pleasant exercise to the taxpayer.





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 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.


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 constitute of individuals or elements that are homogeneous in description.

This study was carried out to examine Taxation as a major source of revenue genera in Nigeria, using Lagos Internal Revenue Scheme. Ajeromi-Ifelodun Local Government Area, Lagos state form the population of the study.



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 hundred and twenty (120) questionnaires were administered to respondents of which 100 were returned. The analysis of this study is based on the number returned.





This chapter summarizes the findings on taxation as a major source of revenue in Nigeria, Lagos State as case study. The chapter consists of summary of the study, conclusions, and recommendations.

Summary of the Study

In this study, our focus was on taxation as a major source of revenue in Nigeria, Lagos State as case study. The study is was specifically the study will also to: determine the extent taxation has contributed to revenue generation in Nigeria, examine the extent taxation has contributed to the steady growth in Gross Domestic Product in Nigeria, determine how Nigeria can revolutionalise her tax system in order to boost revenue generation through this source and determine sources of tax in Nigeria.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 100 responses were validated from the enrolled participants where all respondent are staff of Lagos Internal Revenue Scheme, Ajeromi-Ifelodun, Lagos state.


With respect to the analysis and the findings of this study, the following conclusions emerged;

The study was to find out the problem connected with income tax evasion on the economy. The research revealed many problems on individuals’ attitude towards income tax. It was found out that their educational background were low. This was especially in the case of traders. Most of them were basic and secondary school leavers who had no in-depth education in taxes. Also, it was observed that the traders did not keep proper records, which makes it difficult to ascertain their correct and actual assessable incomes. Again the traders’ taxes were used on public officials instead of using it for national development to the benefit of the tax payers and the nation at large, the traders claim. Other conclusions drawn from the study are as follows;

Income taxes are very high in that it takes almost half of their income

There is a poor customer relation on the part of the Imo State tax officials.Tax collectors connive with income tax payer to cheat. Thus figures are understated for tax payers to pay low and the rest of the money which is supposed to be credited to the consolidated fund rather went into individual income tax collector’s pocket.

Most people did not know the importance of tax and therefore feel reluctant to come forward boldly to declare their incomes for tax purposes.


Based on the findings the researcher recommends that;

Based on the primary data obtained from our study through questionnaires and interviews, the researcher recommended that;

The government should ensure organizing regular and frequent tax education for the public to encourage self-employed people about the role their contributions play in the country’s development. This would allow more tax payers to rope into the tax system.

The government of Imo State through the Imo State tax (Domestic tax division) should impose moderate taxes on traders. This is to enable their business to grow and mostly because the operations of traders had been a major source of employment for the youth in Owerri Municipal who did not have the privilege to pursue higher education, as the study revealed that about 87.88% of traders had their academic qualification to be SSCE and below.

Tax officers should pay visit to self-employed place of business in order to make real assessment.

Provision of infrastructure should be seen to be equitably distributed (that is hospital, roads, schools, good drinking water and electricity supply). That is to say, the government should at least distribute its resources fairly for the public to feel impact of the income tax paid.

With regards to the traders, it is being recommended that there should be non- formal classes organized for them in the evening at least three times a week to prepare them overcome their illiteracy deficiency.

Finally, the Imo State tax official should be increased in terms of number and should be well-equipped with the requisite logistics so that they can reach tax payers all the time, to at least guide them on how to prepare up to date tax returns.


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