Tax As A Source Of Revenue To The Federal Government Of Nigeria, Problems, Recommendations For Improvement

TAX AS A SOURCE OF REVENUE TO THE FEDERAL GOVERNMENT OF NIGERIA PROBLEMS RECOMMENDATIONS FOR IMPROVEMENT

ABSTRACT

This research examines the role of tax as a source of revenue for the federal government of Nigeria, identifies the problems associated with the tax system, and offers recommendations for improvement. Taxation is crucial in generating revenue for the government, but Nigeria faces several challenges in effectively harnessing this potential. The problems include low tax compliance, a significant informal economy, tax evasion, and avoidance, a narrow tax base overly dependent on oil revenue, inefficient tax administration, and issues with tax incentives and exemptions.  Multiple Linear Regression analysis was used to analyze the data by employing the use of Microsoft Excel package. The findings revealed that petroleum profit tax, company income tax,x, and value-added tax have a positive impact on Nigeria’s economic growth while custom excise and duties are impacted negatively but overall, a significant relationship between tax revenue and the Nigerian economic growth exists. The utilizapolicymakersenerated revenue from taxes calls for serious conctaxpayersequires the special attention of policymakers, non-compliance with tax loopholes part of the taxpayers is a hindrance, and ineffective administration of tax has given enough loopholes for tax evasion, the consequence of which is poor revenue. It is recommended among others that only skilled professionals and trustworthy hands should be responsible for tax administration and the general public should be educated right from the grass root on the importance of taxes to the entire nation.

CHAPTER ONE

1.1importance  INTRODUCTION

The background of the study is also called important of the study, so the study, of the term paper, is when completed the essence of paying tax. Under the importance of the study, we have income tax which is one of the major sources of avenue of the Federal Government in question. In tax collected comes to the the taxpayers in the form of social amenities such as asPiperr Bourne water, electricity, health center, good road, school, and the building of market, all these are what benefit the tax they pay, Also, income tax has some social effects to the taxpayers such as relief. The relief after the social structure of whosetaxpayerx payer in the Federal Government. They relieve respect for children and function relief on the insurance policy, premiums, and dependent relatives. Government of the Nigeria spreads the money collected from income tax which has been imposed on determinate objects or projects such as justice etc. Some of the revenue collected from taxes is usually distributed as part of the proceeds of income tax the work is also based on oral interviews, observations, answers from comprehensive, questionnaire and comparisons between what is laid down in Lopman and what is in operation.

The Nigerian tax system has undergone significant changes in recent years, with a focus on reviewing and simplifying tax laws. The tax revenue is enforced by the three tiers of government: Federal, State, and Local Governments, each with their specific roles outlined in the Taxes and Levies Act of 1998. The purpose of tax revenue is to generate funds to improve the welfare of the people and promote economic growth and development by providing essential amenities and public services through an efficient administrative system.

Tax revenue plays a crucial role in driving economic activities, growth, and development. However, its impact may not be fully realized if not properly administered. Therefore, it is necessary to examine the relationship between tax revenue and the economy to formulate effective policies and strategies for its efficiency. Scholars such as Olashore (1999) and Oni (1998) have highlighted the need for reform in tax administration and the inefficiencies in tax refunds and duty drawbacks administration. Vincent (2001) divides economic development into two periods: the early stage when the economy is underdeveloped, and the later stage when it is developed. During the early period, direct taxes may have limited application due to the predominance of rural areas and subsistence agriculture, making income estimation difficult.

In the 21st century, tax administration in Nigeria faces the challenge of advancing professionalism, accountability, and public awareness about the importance and benefits of tax revenue in personal and business lives. These benefits include promoting economic activity, facilitating savings and investment, and creating a competitive advantage. Failure to meet these challenges calls for tax regime reform and improved administration. Tax revenue mobilization in Nigeria has been challenging due to resistance in the form of evasion, avoidance, and corrupt practices. These activities are seen as detrimental to the economy and hinder development. Adequate tax collection is essential for utilizing economic resources effectively, creating prosperity, employment opportunities, infrastructure development, and essential public services. Tax resistance undermines the development process. Tax rates can be adjusted to influence macroeconomic stability, as seen in countries like Canada, the United States, the Netherlands, and the United Kingdom, which derive substantial revenue from company income tax, value-added tax, and import duties.

The contribution of tax revenue in Nigeria has not met government expectations, leading to a focus on expanding non-oil tax revenue. The study aims to examine tax as a source of revenue to the federal government of Nigeria’s problems and recommendations for improvement. However, the work has been done not without some limitations. The researcher was confronted with some unlimbering factors during her time of study such as limited time during the period of the study. In addition to this work,k she was faced with other problems such as attending her lectures, preparation for the forthcoming examination for an ordinary national diploma even financial constraints.

1.2 STATEMENT OF THE PROBLEM

The problem stated by tax as a source of revenue for the federal government of Nigeria.

In every ta,x there must be direct and indirect which is commonly in every tax as a source of revenue to the federal government such as where we have a computer café in Nigeria. In the computer café, there are not enough computers, machines, electricity, and staff improved there because people who usually come from browsing are not comfortable. So, the solution to this problem of paying tax in a computer café,  is the government should go to the NEPA authority for the provision of electricity instead of using a generator in a computer café.

And to provide enough computer machines and provide enough staff for attending to people who usually come to a computer café.

Another problem of tax as a source of revenue for the federal government of Nigeria is the problems of banks in some Nigeria. For there is not enough mortgage after depositing to the bank. So government should help with the problem of tax in other to penalize any bank in Nigeria that does not usually put a mortgage in the money deposited. So this solution should be made.

1.3 SCOPE OF THE STUDY

The research examines tax as a source of revenue for the government of Nigeria using the period of 2007 to 2016. The work was conducted by contracting taxpayers which comprised; office workers, petty traders, and the federal inland revenue hoping that whatever information obtained from them was assumed to be the same in all other areas. This study will guide answers to the meaning of taxation as a revenue-generating mechanism for the federal government of Nigeria. Much attention will be given to the roles of tax in the economy. Some of the factors that mitigate against tax are identified and solutions and recommendations will be given to all the above problemstoocurtailingl them or stop them entirely.

1.4 LIMITATION OF THE STUDY

In the limitation of tax as a source of revenue to the federal government of Nigeria. Work has been done not without some limitations. The researcher was confronted with some unlimbering factors during their time of study. Such as limited time during the period of the study. In addition to this work, she was faced with other problems such as attending their lectures, preparation for the fourth examination for an ordinary national diploma even financial constraints.

1.5 OBJECTIVE OF STUDY

The objective of this research among others is aiming at:

1. Improving on the techniques of assessment and collection of taxes at the federal government level. This is because, if the techniques are improved, the government will generate more revenue.
2. Examining the rate and contribution of taxation in the economic development of the federal government of Nigeria
3. Enumerating the problems confronting assessment and collection of taxes at the federal level.
4. Offering useful suggestions on how to solve taxation problems
5. Suggesting the methods through which tax can be imposed to enable the citizens to the uses and the values of taxes they pay

1.6       DEFINITION OF TERMS

Taxation: This is a process whereby charges are imposed on the incomes of individuals and organizations by the government and its agencies to raise funds for public purposes.

Revenue generation: This is a tool for receiving money from members of the public by the government to finance its projects and to render essential services like roads, electricity, and bridges in return to the taxpaycorporatezens)

Tax system: this is a legal system for assessing and receiving tax from individuals, and cooperating, or corporations of a country.

Taxevasion: tax evasion is an illegal practice where a person, organization, or corporation intentionally avoids paying his/her/ true and liability to the government.

TaxAuthorities: these are the bodies scheduled with the administration and implementation of tax laws and principles about specific jurisdictions.

Value Added Tax: this is described as a type of indirect tax levied on goods and services purchased by individuals and organizations.

Personal Income tax: This is a type of tax levied on the income of individuals such as civil servants, self-employed people,e etc.

Custom Duty: it is a type of tax levied on imported and exported goods in Nigeria.

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