ABSTRACT
This study evaluates the effect of Education Tax Revenue on the development of Tertiary Education in Nigeria. The Fund was set up to administer and disburse to Federal and State Tertiary educational institutions revenue accruing from 2% Education Tax on the assessable profits of registered companies in Nigeria. The mandate of the Fund is to rehabilitate, restore and consolidate higher educational institutions, and the extent to which these noble goals have been met given the dilapidated state of higher educational institutions in the country has become a recurring subject matter for enquiry. The purpose of the study is to determine whether a causal link exists between Education Tax Revenue and the developmental interventions by TETFund on Physical infrastructure, Research engagements, Human resource development, Library and laboratory facilities, and Conference attendance in Nigeria’s tertiary institutions. Data on education tax revenue and each of the five intervention areas specified for investigation from 1999 to 2018 were collected from the Bulletins of the National Bureau of Statistics, and the Tertiary Education Trust Fund, and analyzed using simple regression technique. Results indicate that education tax revenue has made significant and positive impact on physical infrastructure, human resource development and library and laboratory facilities, while interventions in research engagements and conference attendance were not significantly impacted. This study noted the educational implications of these shortfalls and inadequacies in the light of the mandate and need to advance research and innovation in tertiary institutions, and proposed remedial actions targeted at encouraging government and other stakeholders in the education subsector to prioritize research efforts in tertiary institutions to improve the global visibility of Nigeria’s tertiary institutions, their competitiveness in innovation and institutional ranking.
TABLE OF CONTENTS
Title Page i
Certification ii
Declaration iii
Dedication iv
Acknowledgements v
Table of Contents vi
List of Tables x
Appendices xi
Abstract xii
CHAPTER 1: INTRODUCTION
1.1 Background to the Study 1
1.2 Statement of the Problem 6
1.3 Objectives of the Study 8
1.4
Research Questions 9
1.5
Research Hypotheses 9
1.6 Significance of the Study 10
1.7 Scope and Limitations of the Study 11
1.8 Definition of
Operational Terms 12
CHAPTER 2: REVIEW OF RELATED LITERATURE
2.1 Conceptual Framework 13
2.1.1 Concept of taxation 13
2.1.2 Importance of taxation 14
2.1.3 History of
taxation in Nigeria 15
2.1.4
Nigerian tax system and its structure 18
2.1.5
Tax authorities in Nigeria 19
2.1.6 List of
approved taxes and levies for the three tiers of government 19
2.1.7 Education 22
2.1.8 Tertiary education in Nigeria 23
2.1.8.1 Physical infrastructure in Nigerian tertiary institutions 27
2.1.8.2 Human resource development in Nigerian tertiary institutions 28
2.1.8.3 Research in
Nigerian tertiary institutions 30
2.1.8.4 Libraries and laboratories in Nigerian tertiary institutions 31
2.1.8.5
Conference attendance in Nigerian tertiary institutions 33
2.1.8.6
Teaching practice in Nigerian tertiary institutions 34
2.1.9 Education tax 35
2.1.10 Tertiary
education trust fund (TETFund) 37
2.1.10.1 The board of trustees 39
2.1.10.2 Appointment of the
executive secretary and other staff 41
2.1.10.3 Ratio of distribution to beneficiaries
42
2.1.10.4 Tetfund intervention categories 42
2.1.10. 5 Tetfund achievements 43
2.1.10.6 Strategic
management of tetfund 49
2. 1.10.7 Challenges
of tetfund 52
2.1.10.8 Enlistment as a beneficiary 53
2.1.10.9 Guidelines
and requirements for accessing the regular (annual) tetfund allocations 54
2.1.10.10 Guidelines
and requirements for accessing the special tetfund allocation 56
2.1.10.11 Guidelines
and requirements for accessing funds for physical infrastructure for teaching and learning 56
2.1.10.12 Guidelines and requirements for accessing
funds for academic staff training & development
(AST&D) programme, conference attendance and teaching practice 64
2.1.10.13 Guidelines
and requirements for accessing funds for library development, institution-based research, academic
manuscript/books publication and academic research journal 75
2.1.10.14 Monitoring of projects funds 83
2.1.10.15 Tetfund desk officers 84
2.1.10.16 Timelines for the delivery of tetfund-related
interventions 86
2.2 Theoretical Framework 89
2.2.1 Socio
political theory 89
2.3
Empirical Review 90
2.4 Research Gap 111
CHAPTER 3: methodology
3.1 Research Design 112
3.2 Area of
Study 112
3.3 Population 113
3.4 Sample Size 113
3.5 Sources of
Data 114
3.6 Method of Data Collection 114
3.7 Model Specification 114
3.8 Data Analysis Techniques 116
CHAPTER 4: DATA PRESENTATION AND ANALYSIS
4.1 Data Presentation 117
4.2 Data Analysis 117
4.2.1 Data validity test 117
4.2.1.2 Stationarity/ unit root tests 118
4.2.2 Descriptive statistics 119
4.2.3 Regression of the estimated model summary 121
4.2.3.1: Regression model for education
tax revenue and number
of physical infrastructure in tertiary
institution in Nigeria 121
4.2.3.2 Regression model for education
tax revenue and number
of human resource development
in tertiary institutions in Nigeria 123
4.3.3.3 Regression model for education
tax revenue and number
of research interventions in tertiary institutions in
Nigeria 125
4.3.3.4: Regression model for education
tax revenue and number
of library and laboratories in
tertiary institutions in Nigeria 127
4.3.3.5: Regression model for education
tax revenue and number
of conferences attendance in
tertiary institutions in Nigeria 129
4.3.3.6: Regression model for education
tax revenue and number
of teaching practice interventions in
tertiary institutions in Nigeria 131
4.3 Discussion
and Interpretation of Results 133
CHAPTER 5: CONCLUSION AND
RECOMMENDATIONS
5.1 Conclusion 136
5.2 Recommendations 136
5.3
Contribution to Knowledge 137
References 139
LIST OF TABLES
2.1:
Report of academic staff training & development (AST&D) 44
2.2:
Report of conference attendance (CA) 45
2.3: Disbursement of library
development Intervention fund 45
2.4: Disbursement of institution
based research (IBR) intervention fund 46
2.5: Locations and status
of academic publishing centers 47
2.6: Disbursement of academic manuscript development (AMB)
intervention fund 48
2.7: Disbursement of
academic research journals intervention (ARJ) fund 49
2.8: Infrastructure-based
interventions 86
2.9 Academic/content-based
and library interventions 87
2.10 Summary
empirical review 103
4.1:
Augmented dickey fuller (ADF) test 118
4.2: Descriptive statistic table 119
4.3: Regression result of educational tax revenue and number of physical
infrastructures in Nigeria 121
4.4: Regression result of educational tax revenue and number of human
resource development in tertiary
institutions Nigeria 123
4.5: Regression result of educational tax revenue and number of research
interventions
in tertiary institutions Nigeria 125
4.6: Regression
result of educational tax revenue and number of library and
laboratory in
tertiary institutions Nigeria 127
4.7: Regression result of educational tax revenue and number of conference
attendance in
tertiary institutions Nigeria 129
4.8: Regression result of educational tax revenue and number of teaching
practices interventions in
tertiary institutions Nigeria 131
APPENDICES
I:
Tertiary institutions enlisted in Tetfund
150
II: Unit root tests result 158
III: Interview guild 172
IV: Tetfund Project data 173
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Taxation
is an essential part of a country’s investment and growth plan. Taxes represent
a payment, a financial charge, imposed by governments to raise funds for direct
and indirect benefits. It is a powerful tool for achieving economic and social
policy objectives of government and it is a means of transferring resources
from the private to the public sector.
A
definition of tax states that Tax is a compulsory levy imposed on a subject or
upon his property by the government to provide security, social amenities and
create conditions for the economic well-being of the society (Appah, 2004;
Appah and Oyandonghan, 2011). Azubike
(2009), defined tax as a major player in every society of the world, as
governments all over the world engage in activities to raise funds in order to
finance social goods and its programmes.
There
are three basic objectives of taxation which are: raising revenue for the
government, regulating the economy and economic activities, and controlling income
and employment (Anyanwu, 1993). Government collects taxes in order to provide
an efficient and steadily expanding non-revenue yielding services, such as
infrastructure-education, health, communications system etc, employment
opportunities and essential public services (such as the maintenance of laws
and order) irrespective of the prevailing ideology or the political system of a
particular nation (Worlu and Nkoro, 2012).
Taxation
is the most important source of revenue for modern governments, typically
accounting for ninety percent or more of their income (Adams, 2001). Kusi
(1998), states that many countries of the world depend mainly on taxation for
generating required income to meet their financial needs, and according to Ibanichuka, Akani and Ikebujo (2016), the economic history of both developed
and developing countries reveal that tax is an important tool in the hand of
the government; not only to generate revenue but also to achieve goals such as
influencing the direction of investment and taming the consumption of certain
goods and services. Governments of the countries like Canada, United States,
Netherland and United Kingdom have substantially influenced their economic
development through tax revenue generated from Company Income Tax, Value Added
Tax, and Personal Income Tax and have prospered through tax revenue (Oluba,
2008).
In
Nigeria, taxes are imposed on the following bases:
- On
Individuals: Personal Income Tax and Development levy
- On
Companies/Corporate Entities: Companies Income Tax, Petroleum Profit Tax,
Education Tax and Technology Levy
- On
Transactions: Value Added Tax (VAT), Capital Gains Tax, Stamp Duty, Excise Duty,
Import Duty and Export Duty.
- On
Assets: Property
Tax
In
the 1970s, the Nigerian government was able to invest huge sums of money into
the education sector mainly as a result of the considerable increase in wealth
brought about by huge crude oil sales. Many other sectors equally benefited
from the new found wealth of the government (Ugwoke, 2013). By the time the oil glut of the 1980s came, the
funds needed in the education sector was already enormous and the poor economy
could no longer carry the burden of education because though the income had
shrunk considerably, the number of educational institutions and enrolment could
not be equally reduced. Consequently, the governments that had rushed and taken
over schools from missionaries and private proprietors at the wake of the oil
boom, found itself in a dilemma (Ugwoke, 2013).
The
Budgetary allocation to education by all the three tiers of government in
Nigeria, grossly falls short of the UNESCO prescription of 26% of the total
budget each year. Critically, education was receiving less than 2 percent of
the GDP and this poses a serious danger to the country’s long-term growth and
development prospects. To worsen it, there exists large variances between
budgetary provisions and actual expenditures in the education sector as
budgetary pronouncements were not usually backed by fund releases (Ugwoke,
2013).
Ugwoke
(2013), stated that the education sector in Nigeria became one of the worst
funded, most dilapidated, and fastest declining sectors in terms of
infrastructure, capacity building, and quality of output. The effect of all
these, is the perennial industrial action (strikes) by lecturers in the Nigeria
tertiary Education sector.
In
order to eradicate the problem of funding education in Nigeria, the
administration of the former Head of state of Nigeria Ibrahim Babangida government
decided to constitute the Commission on the Review of Higher Education in
Nigeria (the Grey Lange Commission) to Review the post-independence Nigeria
higher education after the Lord Ashby’s commission of 1959 to arrest the
situation (TETFund, 2014)
The
Grey Commission recommended among other things the funding of Nigerian higher
institutions by involving the private sector through a special taxation system.
On 1st January, 1993, the Federal Government promulgated Education Tax Decree
No 7 of 1993 to imposes a 2 percent Education Tax on the assessable profit of
all registered companies in Nigeria, and also to establish an Education Tax
Fund (ETF) and a Board of Trustees to manage and administer the fund (TETFund,
2013). Therefore education Tax came as a result of paucity of fund and the
goals of education as enumerated in the Nigerian National Policy on Education
were no longer being achieved.
This was a home grown
solution to address issues of funding to rehabilitate
decaying infrastructure, restore the lost glory of education and
confidence in the system as well as consolidate the gains thereto; build
capacity of teachers and lecturers; teacher development; development of
prototype designs; etc. The Education Tax Act No7 of 1993 mandated the Fund to
operate as an Intervention Fund to all public education institutions owned
by Federal and State government. This mandate was faithfully
discharged between 1999 to May 2011 when the ETF Act was repealed and
replaced by the Tertiary Education Trust Fund Act, because the fund was
overburdened and overstretched and could only render palliative support to all
levels of public educational institutions in Nigeria with duplication of
functions and mandate of other Agencies set up after the ETF, such as Universal
Basic Education (UBE) and Millennium Development Goal (MDG). The decay, rot and
dilapidation of facility issues in the tertiary education continued to be
irritating as Funds were only thinly spread.
Tertiary
Education Trust Fund (TETFund) was established by the Tertiary Education Trust
Fund Act 2011 under the Education Tax Act No 7 of 1993, as amended
by Act No 40 of 1998, to administer and
disburse to Federal and State tertiary education institutions the 2 percent
Education Tax on the assessable profit charged on all registered companies in
Nigeria. The Fund was given three cardinal objectives of rehabilitation,
restoration and consolidation of Tertiary Education in Nigeria (TETFund, 2017).
The Federal Inland Revenue Service (FIRS) was given
the responsibility of assessing and collecting the tax on behalf of the Fund.
However, funds are disbursed for the general improvement of education in
Federal and State Tertiary Educations specifically for the provision or
maintenance of essential physical infrastructure for teaching and learning,
instructional materials and equipment, research and publications, academic
staff training and development, among other needs that are critical and
essential for the improvement of quality and maintenance of standards in the
higher educational institutions (TETFund, 2017).
According to Inyiama and Nwankwo (2016), TETFund
ensures that funds generated from education tax are utilized to improve the
quality of education in Nigeria by providing funding for educational facilities
and infrastructural development, promoting creative and innovative approaches
to educational learning and services, stimulating, supporting and enhancing
improvement activities in educational foundation areas like Teacher Education,
Teaching Practice, Library Development as well as championing new
literacy-enhancing areas such as scientific, information and technology
literacy. Onyeike and Eseyin (2014) reported that TETFund’s presence has been
felt in virtually all universities, polytechnics and colleges of education in
the country
The
Act establishing the TETFund prescribes the distribution of the funds in the
ratio 2:1:1 respectively to Universities, Polytechnics and Colleges of
Education (COEs). The Act provides that fairness and equality should be ensured
in the distribution of the funds to the beneficiary institutions, and
currently, there are Eighty-one (81)
Universities, sixty-four (64) Polytechnics and seventy (70) Colleges of
Education enlisted in TETfund, (TETFund 2019).
TETFund provided about N300 billion
on Infrastructural developments in Universities, Polytechnics and Colleges of
Education in Nigeria between 2011 and 2016 to bridge the gap in the
infrastructural development and that a total of twenty two thousand (22,000)
scholars have benefited from the Fund’s scholarship intervention under the
academic staff development programme in the last ten (10) years (Bakari, 2017).
Following these intervention efforts,
it becomes imperative that a study should be conducted to assess the effect of
educational tax revenue on the educational development of tertiary institution
in Nigeria with particular focus on TETFund, as this will enable the government
to assess the education tax policy for possible review.
1.2 STATEMENT OF THE PROBLEM
Education
is one of the most important sector in almost every modern economy and the
backbone for any economic transformation. It
gives us knowledge of the world around us and changes it into something better.
It develops in us a perspective of looking at life, helps us build opinions and
have points of view on things in life.
What
necessitated the promulgation of this Education Tax Act was the widely
recognized decline in Educational standards and the deep rot in infrastructure
and other facilities at all levels of the Nigerian educational system. From the
primary to secondary and tertiary levels, it was obvious that there was urgent
need for urgent intervention to improve educational facilities and
infrastructure, restore high morale of teachers, attract and retain qualitative
entrants into the profession, encourage professionalism in teaching and improve
teacher education curriculum. There was also the need to create an enabling
environment for conducive teaching and learning and thus ensure the creation of
a disciplined, committed, highly motivated, respected, and professional
teacher.
Tertiary
Education Trust Fund (TETFund) which is one of the best creations of government
and whose vision is to be a world-class
interventionist agency in Nigeria’s Tertiary Education and with a mission to provide focused and transformative
intervention in public tertiary institutions in Nigeria through funding and
effective project management, has invested heavily in physical infrastructure
projects, human resource development, research interventions, instructional
materials and equipment, book development and publication etc, since its
inception.
Unfortunately,
the level of decay in the education system is still very high. The general
decay in human and material resources in Nigerian tertiary institutions seems
to be because of inadequate funding. Lack of basic and vital infrastructural
facilities and decay are common sights in our higher institutions. The
situation is so bad that almost all tertiary institutions in Nigeria have
gotten their respective shares of the infrastructural challenge.
An average public tertiary
institutions in Nigeria today lacks basic infrastructure, ill equipped
libraries and laboratories which are over stretched, the classrooms are no what
a standard classroom should be, likewise lecture theaters, as there are many
broken chairs causing some students to stand while receiving lectures and
taking notes. Also the students’ hostels
are in bad shape; there are no regular water supply, electricity and enough
accommodation.
There are no conductive offices for
lecturers, lack of support for local and international conferences and
publications, inadequate instructional materials and equipment, non-training
and development of academic staff. Apart from employing qualified academic
staff, there is need for them to have regular training while on the job to keep
abreast with the current events in their fields of study. Very few academic
staff had the chances to get scholarships and research grants. On the research interventions by TETFund, it is
difficult to access, lecturers have given many reasons for not accessing the
fund such as that the guidelines for accessing TETFund intervention fund are
difficult to attain. Some of those sent to Europe and America on scholarships
end up not coming back causing reduction of academic staff. In some
departments, the staff-students ratio is so high that there is no good
interaction for proper guidance and monitoring.
One
would have expected that after compulsory levy of 2% assessable profit
of all registered
companies in Nigeria for over 20 years, it ought to have
positively impacted on both the quantity and quality of education offered in
Nigeria. This is what this study sets to ascertain.
Unfortunately,
no studies have been carried out to assess the effect of education tax revenue
on the development of tertiary education in Nigeria with a focus on Tetfund to
the best of my knowledge.
1.3 OBJECTIVES OF THE STUDY
The
main objective of this study is to determine the effect of Education Tax
Revenue on the development of tertiary education in Nigeria.
The
specific objectives are:
1.
To evaluate the effect of
education tax revenue on Physical infrastructures in tertiary institutions in
Nigeria.
2.
To ascertain the effect
of education tax revenue on Human resource development in tertiary institutions
in Nigeria.
3.
To examine the extent
education tax revenue influence on Research interventions in tertiary
institutions in Nigeria
4.
To evaluate the effect of
education tax revenue on library and laboratory development in tertiary
institutions in Nigeria
5.
To ascertain the effect
of education tax revenue on conference attendance interventions in tertiary
institutions in Nigeria.
6.
To determine the effect
of education tax revenue on teaching practice interventions in tertiary
institutions in Nigeria.
1.4 RESEARCH QUESTIONS
To pursue the above objectives the
following questions have been raised
- How
does education tax revenue affect Physical infrastructures in tertiary
institutions in Nigeria?
- What
is the effect of education tax revenue on Human resource development in
tertiary institutions in Nigeria?
- To
what extent does education tax revenue influences Research interventions
in tertiary institutions in Nigeria?
- To
what extent does education tax revenue affect library and laboratory
development in tertiary education in Nigeria?
- What
is the effect of education tax revenue on conference attendance in
tertiary institutions in Nigeria?
- To
what extent do education tax revenue influence teaching practice in
tertiary institutions in Nigeria?
1.5 RESEARCH
HYPOTHESES
The research hypotheses formulated in null form are as
follows:
Ho1
Education tax revenue has no significant effect on Physical Infrastructure in
tertiary institution in Nigeria.
Ho2 There is no significant effect
of Education tax revenue on Human resource development in tertiary institutions
in Nigeria.
Ho3
Education tax revenue have no significant influence on Research interventions
in tertiary institutions in Nigeria.
Ho4
There is no significant effect of education tax revenue on library and
laboratory development in tertiary institutions in Nigeria.
Ho5
Education tax revenue have no significant effect on conference attendance
interventions in tertiary institutions in Nigeria.
Ho6
Education tax revenue have no significant influence on teaching practice
interventions in tertiary in Nigeria.
1.6
SIGNIFICANCE OF THE STUDY
The relevance of this study is
enormous and serves various interests, such as the government, Tertiary
institutions in Nigeria, the academia and general public.
To Tertiary Education Trust Fund
(TETFUND): This study will serve as assessment to measure the impact of its
interventions in Nigeria’s public tertiary institutions.
To the Government: This study will help government
understand the prospects and challenges of Education Tax and Tertiary Education
Trust Fund (TETFund). The study will make them know the impact of education tax
on tertiary education in Nigeria, as to know if education tax rate will be
reduced or increased. It will also help
in highlighting the problems facing Tertiary institutions in Nigeria and the
reason for ASUU continuous agitation, and the way forward.
To Tertiary institutions in Nigeria: The study will help tertiary institutions to
know more about education tax and Tertiary Education Trust Fund (TETFund), and
the level of its impact on tertiary education in Nigeria. It will also help lecturers know more about
TETFund guidelines and how to access grants.
To the Academic: This study will
serve as a good literature to those who intend to carry out further studies in
the area of education Tax and Tertiary education in Nigeria. It will also help
other researchers to fulfill their task of academic pursuit.
To the General Public: It will help
the general public understand what education tax and Tertiary education Trust
Fund (TETFund) is all about, there challenges and prospects. Also, it will help
them know the problems facing Tertiary institutions in Nigeria and the reason
for ASUU continuous agitation.
1.7
SCOPE AND LIMITATIONS OF THE STUDY
This study analyzed the effect of education tax revenue on
the development of tertiary education in Nigeria. The study evaluated the effect of education
tax revenue on number of Physical infrastructures, numbers of Human resource
development, and number of Research interventions, numbers of library and
laboratory development, number of conference attendance interventions and
number of teaching practice interventions in tertiary institutions in Nigeria.
The study covered all the two hundred
and fifteen (215) government owned tertiary institutions enlisted in TETFund, from 1999 to 2018 due to
availability of data.
A number of problems were
encountered in undertaking this study. The researcher faced unco-operative
attitude from some TETFund staff and desk officers. Some of the staff found it
difficult to express their option about TETFund, and it was difficult getting
data from TETFund. Also, some materials on the internet are secured, for which
one is required to pay some good amount of money to be granted access to them, which
the researcher paid for.
1.8 DEFINITION OF OPERATIONAL TERMS
Taxation:
Taxation is a necessary payment made
by individuals, and legal entity for revenue generation to meet the needs of
government; as to provide fiscal tool for stimulating economic growth and
development; and to redistribute income/wealth in order to reduce inequality.
Tax Revenue:
This is the income that is gained by
governments through taxation.
Education Tax:
Education
tax is a tax imposed on every Nigerian resident company at the rate of 2% of
assessable profit for each year of assessment. This tax is seen as a social
obligation placed on all companies to ensure that they contribute their own
quota in the development of education in Nigeria.
Tertiary Education Trust Fund
(TETFund):
TETFund is an intervention agency set
up to provide supplementary support to all levels of public tertiary
institutions with the main objective of rehabilitation, restoration and
consolidation of tertiary education in Nigeria. The main source of income
available to the fund is the two percent (2%) education tax paid from the
assessable profit of companies registered in Nigeria.
Tertiary
education:
Tertiary education
is the level of education given to an individual after secondary education in
higher institutions of learning such as Universities, Polytechnics, Colleges of
education and other institutions of higher learning offering correspondence
courses, diplomas and certificates.
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