This study examines tax reforms and the Nigeria
economic development. Its main objective is to examine the tax reforms and the
economic development of Nigeria.
The primary source of data collection was used in gathering data from
respondents. A structured questionnaire was designed by the researcher and
validity by two experts from the statistics department was used to obtain data.
Chi-square (X2) was used to test the hypotheses formulated. It was
discovered that tax and rate form one of the important source of revenue to Nigeria
government, but tax payers react negatively to the payment of taxes. The study
concludes that taxes and rate are very useful to finance social and economical project
and it was recommended among others that government should try as much as
possible to make the citizen aware and understand how state money is spent to
encourage tax payers pay their taxes.
of Contents vi
Chapter One: Introduction
Background to the Study 1
Statement of Problems 3
Research Questions 4
Objectives of the Study 5
Statement of Hypothesis(es) 5
Significance of the Study 6
Scope of the Study 6
Limitation of the Study 7
of Terms 7
Two: Review of
of Taxation 14
2.3 Types of
of Taxation 33
Uses of Taxation 37
Chapter Three: Research Method and Design
Research Design 55
Description of Population of the Study 55
Sample Size 55
Sampling Techniques 56
Sources of Data Collection 58
Method of Data Presentation 59
Method of Data Analysis 60
Four: Data Presentation, Analysis
4.1 Introduction 61
4.2 Data Presentation 61
4.3 Data Analysis 61
4.4 Hypothesis Testing 69
Five: Summary of Findings, Conclusion
5.2 Summary of Findings 71
1.1 Background to the Study
project work is to enable us to understand the tax reform and Nigerian economy
life in Nigeria did not see much of taxation. The economy was mostly self
contained the lives of the people conducted by mere exchange of goods and
services the people were living in a restricted geographical area, all land
belonged to the state and the public service are provided by the state. The
king would send round his tax collector to collect direct from the public
services. The town criers were used and failure to comply will face the
penalties from the king.
the economy developed and become more complicated, and as the society become
more complex, the role of taxation has become much more important and the
imposition of tax become an instrument of economy development and social
change. It is a key factor in shaping the fiscal policy, monetary and the
investment policies of the government.
government has to determine what type of taxes is mostly suited for the country
and to what extent each person should be taxed. The choice of tax and the rate
of tax depend on the long-term objective of the government. It depends on
whether a government wants to affect a re-distribution of wealth it intends to
allow a completely free enterprise with no other Social Consideration.
another way round, taxation is an essential element in speeding the pace of
development through f saving and investment equitable distribution of income
yet many fiscal system tend to have the opposite effect through overt and
covert distribution against favour of capital. The increase or decrease in the
routes of income tax can have deflationary or inflationary effects since such
increased or decreased affect the amount of money available to the private
sector of the economy.
Statement of Problem
had been seen as one of the major source of government revenue of any nation.
Though, there are a lot of problem faced in collecting taxes, some of the
problem are as follows.
and private companies usually declare false profit or income so as to prevent
correct assessment by the tax official by this; they know that the official
will only levy taxes on the amount of income directed. Another problem is the
corruption on the part of tax collector. Not only that the tax payers are under
assessed but the tax officials do this for their selfish ends.
ignorance on the part of the tax payer constitutes another problem. Some among
them do not know the reason why they should pay tax. They even thought that the
money so called belong to the official.
such, they avoid every responsibility of paying taxes. Besides some people also
disagree in paying tax despite the fact that they know that it is compulsory
for them to pay. The farmers also complain that the time of collections is not
convenient for them and that recommendation should be made to the government
for the collection of tax during the harvest period.
this backdrop, the researcher intends to carryout an investigation to examine
how tax reforms can be used to fill this gap that exist while tax payers
compliance’s yet to received reasonable degree of compliance.
For the purpose of this study, the following
research questions have been designed to guide this study:
1. Does the payment of taxes imposed by the
government of a nation have any negative impact on the citizens?
Does the private individual, business
undertaking and corporate bodies have any benefit on the payment of tax at the
3. Is there any problem encountered by the
officials or administrators during the time of collecting taxes?
Objectives of the Study
main objective of the study is to examine the tax reforms and the economic
development of a nation. While the specific objectives are:
1. To enlighten the citizen on the importance
of paying taxes imposed by the government towards the economy development of
To educate the private individual,
business undertaking and corporate bodies on the useful benefit that they might
derive by paying taxes at the appropriate time.
3. To give the officials or administrators
necessary information that may enhance and intimate the problem encountered
during the time of collecting taxes.
1.5 Statement of
To achieve a meaningful objective of this work,
the hypothesis has been formulated to enhance the authentication of the subject
matter. That is, the hypothesis will be tested in a null form, denoted by Ho
and the alternative form denoted by HI.
Tax reform does not have
a negative impact on the economy development of Nigeria.
Tax reform has a negative
impact on the economy development of Nigeria.
Significance of the Study
writer has the eager hope that at the end of this study, the finding will be
useful to the following people: student, teacher, and the government. This would
enable the student to be aware of the reason for paying taxes.
to the teachers, this will help them as far as payment of taxes in the country
is concerned so as to enable them to plan their course contents with regards to
facts and figures for students understanding.
the study should be a guide to the state, local and federal government as a
whole when plunging for its annual budget with regards to economic development
of the nation.
Scope of the Study
This study is restricted to tax reform and the
Nigerian economic development. It is designed to cover the meaning of taxation
and its reform in Nigerian economy development and it falls within the time
frame of 2008 – 2013 using a sample size of 50 for effective survey.
Limitation of the Study
writing this project, so many problems were encountered, which are listed
Geographical Coverage: Factor that may
likely affect the work is the issue of investigating the concerned people in
carrying out the research work.
Problem of sourcing for material: The
research was faced with problems of getting current materials, textbooks,
journals and seminar papers related to subject matter.
Definition of Terms
is a compulsory levy impose by the government on the citizen of a country.
Year: This is the period that runs from first January to
thirty first December each year.
Duties: These are taxes levied on home or locally produced
goods. They are imposed by the government in order to generate more revenue
Base: This is the income of a taxable person on which
tax is charged. It could also be described as that good or services which is
subject to tax.
Assessment: This is a system of assessment whereby the tax
payer provides the necessary information to the tax authority concerning it
income on an income tax return form.
This is a system of assessment whereby the tax payers carries out the
assessment himself and compute the amount of tax due on his income and pay such
tax to state board of internal revenue.
Period: This is the length of the period to which the
assessment relates. It could be less than one year or more than one year, or
exactly one year.
of Tax: This is the effect of tax burden on the taxpayers.
It is that point at which the tax burden finally rest.
Income: This is the income derive from a trade, business,
profession, vocation or employment carried on or exercised by the tax payer as
well as any pension derived from a previous employment.
Income: This means income derived from an investment that
does not relate to any reward for personal services rendered.
Avoidance: This can be described as the act of
making use of the loopholes in the tax law so as to reduce the amount of tax
that would have otherwise been paid. i.e. arranging ones tax affairs, making
use of the tax allowance and loopholes so as to reduce ones tax liability.
Evasion: This is the failure to disclose the correct income that should be
assessed either by misstatement of facts, falsification of figures, filing of
incorrect returns or by misrepresentation of tax liabilities.
Liability: This is the incidence of effect of tax
on the tax payers.
is a continuous and persistent rise in the general level of price of goods and
Deflation: This is the continuous and persistent fall in the General
level of price of goods and services.
Holiday: This is a kind
of encouragement given to the infant industries so as not to pay tax given
period of time or year.
This is an annual payment by one person to another.
are also kind of thank you payment to a long serving employee when he is on
Investment: This is an expenditure on goods and services which are not
met for current consumption.
Income: This is the total income of a taxable Person from
all sources put together for a year of assessment.
Income: This is the net value on which income tax will be
assessed after relief will be claimed.