TABLE OF CONTENTS
CHAPTER ONE
1.0
INTRODUCTION
1.1 BACKGROUND
OF STUDY
1.2
STATEMENT OF THE PROBLEM
1.3 AIM
AND OBJECTIVES OF THE STUDY
1.4 RESEARCH
QUESTIONS
1.5 RESEARCH
HYPOTHESES
1.6 SIGNIFICANCE
OF THE STUDY
1.7 SCOPE
AND LIMITATION OF THE STUDY
CHAPTER
TWO
2.0 LITERATURE REVIEW
2.1 INTRODUCTION
2.2 GENERAL
REVIEW OF LITERATURE
2.21 REVENUE
2.22 TAX
ADMINISTRATION
2.23 SOURCES OF REVENUE
2.24 CHALLENGES
OF TAX ADMINISTRATION IN LAGOS STATE
2.25 STRATEGIES FOR REVENUE GENERATION
2.3 THEORETICAL
FRAMEWORK
CHAPTER THREE
3.0 RESEARCH
METHODOLOGY
3.1 INTRODUCTION
3.2 RESEARCH
DESIGN
3.3 POPULATION
OF STUDY
3.4 SAMPLING
AND SAMPLING TECHNIQUE
3.5 SOURCES
OF DATA AND RESEARCH INSTRUMENT
3.6 STATISTICAL
TOOLS AND ANALYTICAL PROCEDURE
REFERENCES
CHAPTER FOUR
4.0 DATA PRESENTATION AND ANALYSIS
4.1 INTRODUCTION
4.2 PRESENTATION
AND ANALYSIS OF DATA
4.21 ANALYSIS OF
RESPONDENTS’ DATA
4.22 ANALYSIS
ACCORDING TO RESEARCH QUESTIONS
4.3 TEST OF
HYPOTHESES
4.31 TEST OF
HYPOTHESIS ONE
4.32 TEST OF
HYPOTHESIS TWO
4.33 TEST OF
HYPOTHESIS THREE
CHAPTER FIVE
5.0 DISCUSSION
OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.1 INTRODUCTION
5.2 DISCUSSION
OF FINDINGS
5.3 CONCLUSIONS
5.4 RECOMMENDATIONS
CHAPTER 1
1.0 INTRODUCTION
1.1
BACKGROUND OF STUDY
The world over, taxes is one major source of government
revenue, however, not every government has been able to effectively exploit
this great opportunity of revenue generation. This can be attributed to a
number of reasons including the system of taxation; tax legislation; tax
administration and policy issues; over reliance on other sources of revenue
(such as foreign aid and grants); corrupt practices in the system – especially as it relates to the system of tax
collection and the behaviour of citizens towards tax payment; and ease of tax
payment (Akintoye and Tashie, 2013). However, the increasing cost of running
government coupled with dwindling revenue has led various State governments in
Nigeria in formulating strategies to improve their revenue base. (Ahmad, 2005) as
cited in (Enahoro and Olabisi, 2012) pointed out that the objectives of the tax
system are multi-dimensional in nature which includes revenue generation,
resource allocation, a fiscal tool for stimulating economic growth and
development and social functions, like redressing the rural-urban population
drift. Taxes, and tax systems, are fundamental components of any attempts to
develop a state, and this is particularly the case in developing or
transitional nations. The near collapse of the National economy has created
serious financial stress for all tiers of government (Adenugba and Ogechi,
2013). Despite the numerous sources of revenue available to the various tiers
of government, oil alone accounts for 40 percent of the country’s GDP, 70 percent
of budget revenues, and 95 percent of foreign exchange earnings (Oloyede,
2010). Unfortunately, the serious decline in the price of oil in recent years
has led to a decrease in the funds available for distribution to the states.
The need for state and local government to generate adequate revenue from
internal sources has therefore become a matter of extreme urgency and
importance. This need underscores the
eagerness on the part of state and local governments and even the federal
government to look for new sources of revenue or to become aggressive and
innovative in the mode of collecting revenue from existing sources. Section 16
(b) of the 1999 Constitution of Federal Republic of Nigeria, under the Economic
Objectives, provides that the government
should control the national economy in such manner as to secure the maximum
welfare, freedom and happiness of every citizen on the basis of social
justice and equality
of status and opportunity. Section 16 (c) of the same
Constitution further provides that the state without prejudice to its right to
operate or participate in areas of the economy other than the major sectors of
the economy, manage and operate the sectors of the economy. Generally,
government the world over earns revenue from taxes, non- tax income and capital
receipts.
Revenue:
As stated by the International
Monetary Fund (IMF) (2001), revenue is an increase in net worth resulting from
a transaction. For general government units, there are four main sources of
revenue: taxes and other compulsory transfers imposed by government units,
property income derived from the ownership of assets, sales of goods and
services, and voluntary transfers received from other
units.
Tax:
Arnold and Mclntyre (2002) defined
tax as a compulsory levy on income, consumption and production of goods and
services as provided by the relevant legislation. According to Azubike (2009),
tax is a major player in every society of the world. The tax system is an
opportunity for government to collect additional revenue needed in discharging
its pressing obligations. Odusola (2006) stated that Nigeria’s tax system is
characterized by unnecessary complexity, distortion and largely inequitable tax
laws that have limited application in the informal sector that dominates the
economy. (Abubakar 2008) as cited in (Enahoro and Olabisi, 2012) further opined
that the
Nigerian tax system has undergone significant changes in
recent times. The tax system is the process of taxation involving sets of
rules, regulations and procedures with the organs of administration interacting
with one another to generate funds for government (Agbetunde, 2010). An
efficient and effective tax system offers itself as one of the most effective
means of mobilizing a nation’s internal resources and it lends itself to
creating an environment conducive to the promotion of economic growth. Nzotta
(2007) argues that taxes constitute key sources of revenue to the federation
account shared by the federal, state and local governments.
Non-Tax Revenues:
These are other sources of government revenue. They
include administrative revenue, gifts, revenue from government property,
revenue from public enterprises, government owned corporations incomes, central
bank revenue and others.
Capital Receipts:
These can be
in the form
of external loans
and debts from international
financial institutions like the
International Monetary Fund (IMF) and the World Bank.
Internally Generated Revenue:
Internally
generated revenue are
those revenues that
are derived within
the state from
various sources such as
taxes (pay as
you earn, direct
assessment, capital gain
taxes, etc.), and
motor vehicle license, among others.
Revenue is the bedrock upon which any government’s
electoral promises can be realized (Shodipo, 2013). It is the enabling factor
in the provision of public goods. The state recognises its unique status. The
state government is striving to actualise its dream of making Lagos a mega city
by the year 2015. It is also poised to live up to its responsibility of
providing basic infrastructure, such as roads, drainage, water, education and
health-related services needed by its ever-growing population (Ebulu, 2008).
This study therefore seeks the discover the actualisation of the mandate of the
state government in providing the basic social needs of its citizens solely
through the state’s internally generated revenue
1.2 STATEMENT
OF THE PROBLEM
The increasing running
cost of government
coupled with rapid
infrastructural requirement to
meet expanding social needs
of citizenry has
left various governments
with formulating strategies
to improve revenue base. The contending problem of tax evasion,
collusion of tax officers, staggering population increase and diversion of
revenue belonging to government into private pockets remain like a sore,
refusing to go away. This in addition to the unscrupulous activities of some
tax consultants engaged curtail revenue drive. While decrying the low
productivity of the Nigerian tax system, “deficiencies in the tax
administration and collection system, complex legislations and apathy on the
part of those outside the tax net” are identified as some of the root causes of
inadequate internal revenue generation (Ijewere, 1991 and Ndekwu, 1991) as
cited in (Ariyo, 1997). In the case of Lagos state, the story was a sordid
affair. By the turn of the last Century, Lagos had become an international
poster - child for the doomsayers of the coming urban challenge — with a
reputation for overcrowded and squalid living conditions, high rates of
crime, poor governance, urban and
environmental degradation and transport chaos (Filani, 2012). For a megacity
the size of Lagos, with its huge infrastructural and governance backlogs, the
challenges are enormous. Its transformation is a long- term project, requiring
a combination of clear and consistent leadership, constant reform and
innovation, meaningful engagement with the city’s private and corporate
citizens and huge investments (Filani, 2012). This study seeks to discover how
the Lagos state government managed the deplorable revenue situation and brought
a turn around to the situation in the state and the lives of its citizens.
1.3 AIM
AND OBJECTIVES OF THE STUDY
The aim of the study is to assess the revenue generation
drive of Lagos state government through efficient and effective tax
administration alongside its impact on the citizens of the state. Since the
bulk of the revenues flow from the citizens’ pockets, the payment compels the
citizens to ask questions and show interest in how those entrusted with the
management of the collective wealth of the citizens, discharge their duties.
The specific objectives of the study are
to:
i. Examine
the effect of efficient and effective tax administration on internally
generated revenue in Lagos state. ii. Evaluate the impact of increased revenue
generation on the economic well-being of
citizens in Lagos state.
iii. Determine the extent to which efficient
and effective tax administration has influenced economic and infrastructural
development in Lagos state.
1.4
RESEARCH QUESTIONS
i.
What has been the effect of an efficient and
effective tax administration on internally generated revenue in Lagos state?
ii.
How has the increase in internally generated
revenue of the Lagos state government affected the economic well-being of the
citizens in Lagos state?
iii.
To what extent has an efficient and effective
tax administration influenced economic and infrastructural development in Lagos
state?
1.5 RESEARCH HYPOTHESES
In order to answer the above research
questions, the following hypotheses were formulated.
HYPOTHESIS ONE
H0: Effective and efficient tax administration
has not increased Lagos state internally generated revenue.
H1: Effective and efficient tax administration
has increased Lagos state internally generated revenue.
HYPOTHESIS TWO
H0: Increased revenue generation
has not affected the economic well-being of Lagos state citizens.
H1: Increased revenue
generation has affected the economic well-being of Lagos state citizens.
HYPOTHESIS THREE
H0: Efficient and effective tax administration
has not influenced infrastructural and economic development in Lagos
state.
H1: Efficient and effective tax administration
has influenced infrastructural and economic development in Lagos state.
1.6
SIGNIFICANCE OF THE STUDY
In appraising the Nigerian tax system as
a tool for revenue generation, Naiyeju (2010) and Odusola
(2006) asserted that the system is seen as being lopsided,
and dominated by oil revenue. However, 14 years since the return of democracy,
efforts by leaders at various tiers of government have been geared towards
arresting the imbalance and coming up with a regeneration programme that will
give the people, for whose wellbeing the government exists, a new lease of
life. This reason largely informed the tradition in Nigeria whereby a
government is assessed by its ability to provide basic infrastructure such as
good roads, potable water, electricity as well as guaranteeing efficient and
effective education and health care systems. (Ajayi, 2013).
Thus, the study is significant to state governments in
Nigeria as it highlights the aggressiveness and innovativeness of the Lagos
state government to generate revenue aside from oil sources and federal
government allocations through effective and efficient tax administration.
This study is significant to international analysts
interested in the reforms going on in Lagos state, what drives this development
and the impact on residents of the state.
Finally, the study can serve as a means by which the citizens
of the state can appraise the Lagos state government.
1.7 SCOPE
AND LIMITATION OF THE STUDY
This study is delineated to the geographical area of Lagos
state. This is because it is believed that Lagos state serves as a role model
for other states in terms of business activities and rules and regulations
guiding various types of businesses in Nigeria with respect to taxation
(Adeyeye, 2004). It assesses the revenue generating machinery of the Lagos
state government, evaluating the impact of increased revenue generation on the
citizens of Lagos state.
Constraints in the course of the study include shortage of
time, lack of finance, uncooperative respondents, non-knowledgeable
respondents, respondents’ bias in answering questions, inaccessibility to information
termed confidential, inaccessibility of respondents and no response from some
respondents.
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