The Impact of Tax as a Source of Revenue
CHAPTER ONE
OBJECTIVE OF THE STUDY
The objective of this study shall be based on the following:
- To evaluate the economic implication of taxation in the state.
- To determine why government tax officials are collaborators in tax evasion, avoidance and officer economic malpractices.
- To evaluate the extent to which the tax system is boosting economic activities.
- To find out why only corporate bodies take social responsibility initiative.
- To assess the social welfare maximization of the people, the social marginal cost of taxation, SMC(I) and the social marginal benefit of expenditure SMB(E).
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
Taxation is amongst the main stay of every nation and the level of development of any country depends on the amount of revenue generated through taxation and other viable means. The importance of tax in an economy and the ability of government to provide infrastructure and social services cannot be over emphasized. Taxation is one of the most contentious issues in governance both developed and developing nations of the world. Taxes underwrite and explain the capacity of government to discharge its basic duties to the citizens. In fact, in developing countries of the world, taxation is the basis for conduct of government /society relations and is at the epi-center of domestic policy in national election debate (Uzor, 2015) Taxation unarguably is one among other means of revenue generation of any government to meet the need of both the government and citizens. According to Ifurureze and Ekezie (2014), tax is a compulsory levy imposed by the government against the income, profit, property, wealth and consumption of individuals and corporate organizations for the common use and to serve a number of purposes. Taxation enhances the macro-economic indexes of a country and speedy up development in all spheres of human endeavor, thereby creating employments and balance of trade.(Aboyade, 2010). It enhances the financing of public goods, regulate production and consumption patterns as well as serve as vehicle for the protection of infant industries as well reduce income inequality. Okoye, 2014 opines that taxation provides basic amenities, protects the lives and property of the citizens as well as create the enabling environment for individuals and corporate organizations to strive. However. For the government to accomplish these responsibilities, it needs to mobilize enough revenue through taxation of the citizens and her cooperate organizations.
Theoretical Review
The influence of taxation on economic growth has not only being paramount to the government, tax experts and tax officials but has overtime interested both academics and researchers. Myles (2009) linked taxation to growth through the decisions of individual economic agents. He opined that a change in a tax system modifies optimal choices through the equilibrium of the economy ultimately affecting the rate of growth.
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 the impact of tax as a source of revenue. CBN form 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 tax as a source of revenue. 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 the impact of tax as a source of revenue
Summary
This study was on the impact of tax as a source of revenue. Three objectives were raised which included: To evaluate the economic implication of taxation in the state, to determine why government tax officials are collaborators in tax evasion, avoidance and officer economic malpractices, to evaluate the extent to which the tax system is boosting economic activities, to find out why only corporate bodies take social responsibility initiative and to assess the social welfare maximization of the people, the social marginal cost of taxation, SMC(I) and the social marginal benefit of expenditure SMB(E). A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from CBN. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
The whole essence of tax revenue is to achieve economic development through revenue optimization. If revenue generation increases the human development index (HDI) will improve and the people will have long and healthy life, attain high education level and enjoy high standard of living. This study was focused on petroleum profit tax revenue, company income tax revenue and value added tax revenue in relation to economic development. Proper or adequate tax administration so as to generate sufficient revenue to trigger economic growth is a matter of concern to Government and all stakeholders, as it may have adverse consequences on the systematic stability of the revenue base of the nation at any point in time. The magnitude of this effect depends on specific circumstances of each economy, such as regulatory framework, supervision practices, international financial integration, and policy issues. Furthermore, since taxation as a means of revenue generation for the nation, is likely to continue given its huge impacts on the revenue base, further policy measures may be necessary in order to maintain a competitive environment and strengthen the involved agencies for efficiency and profitability. The study recommends amongst others that there is the need to create more incentives for taxation especially the petroleum profit tax and personal income tax. This will help to boast the revenue base from those areas of taxation as seen in the study that their revenue base is low compared to others, incentives can come in the form of tax holidays or other kind of rewards that will make the operator of companies in the oil and gas sector to pay more of tax; government should create more awareness as well as train all people involved in the collection and remittance of VAT on the need for prompt payment of this tax; more reforms in the tax administrations and collection is needed so as to eliminate, if possible the areas that can cause revenue leakage as a result of loopholes in tax collection and remittances from the authorities, and this is capable of limiting the economic growth of the nation
Recommendation
It is recommended that Nigerian government should restructure its petroleum sector by intensifying efforts at processing the crude oil and only selling processed oil to the international market. This will overcome the present effect of external shocks arising from price fluctuation of crude oil due to gloat or quota restrictions by OPEC or financial crises in the international market. Secondly, there should be greater transparency by government on the management and utilization of tax resources so has to give tax payers greater assurance of its application. Also there should be an enhancement of Nigeria’s tax administrative management efficiency by blocking leakages in tax revenue collection and the expansion of the nation’s tax base to attract more tax revenue
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