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.
- 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 system by the policy makers and academia. Having Nigeria as a monolithic economy filled with full dependent on the oil sector has made the economy open to external manipulation and adversely disrupts the planning in the country. Taxation is the only non exhaustible veritable source of revenue to government while oil is an exhaustible resource.
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:
- Collection of taxes from some Nigerians and some businesses.
- Lack of political accountability on the part of officials 3. Diminish of the impact of democracy on average Nigerians.
- 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
- Government imposition of many types of taxes.
- 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.
- Poor level of Computerisation
- Lack of qualified and experienced tax officials at the federal, state and local levels.
1.3 OBJECTIVES OF THE STUDY
The objectives of this study are as follows:
- To ascertain whether tax revenue has an impact on Nigeria’s domestic product, and
- To determine the impact of tax revenue on per capita income in Nigeria
1.4 RESEARCH QUESTIONS
The researcher views the study research questions for a critical identification of the problems in the following:
- To what extent does tax revenue have positive significant impact on Nigeria’s domestic products.
- To what level does Nigeria tax revenue has positive significant impact in per capita income in Nigeria.
1.5 HYPOTHESES OF THE STUDY
Our hypotheses for this study are as follows;
Ho: Tax revenue does not have positive significant impact on Nigeria’s domestic product.
Ho: Tax revenue does not have positive significant impact of the per capita income in Nigeria.
1.6 SCOPE OF THE STUDY
The study covers tax and tax revenue as they concerns Nigeria’s economic growth from 1999 to 2008.
1.7 SIGNIFICANCE OF THE STUDY
The researcher views the government tax official and the student as the relevant target group to this study.
The government tax officials will derive benefits from the study as it shows how relevant they are and the need to generate more revenue with its beneficial effect on the economy.
The study will enrich the research resources in Nigeria. The students stand to benefit a lot from the research.
1.7 OPERATIONAL DEFINITION OF TERMS
TAXATION: This is a Compulsory levy imposed by the government to defray the cost of government and communal services.
GROSS DOMESTIC PRODUCT: This is the market value of all officially recognized final goods and services produced or the primary indicators used to gauge the health of a countries economy.
DEVELOPMENT: This is the sustained concerted actions of a policymakers to promote taxation and economic health of a specified area.
GROWTH: This is the increase in the amount of tax paid by the tax payers over time or it is the conventionally measure in percentage rate of increase in real GDP calculated in real terms.