ABSTRACT
It is widely known that
taxation is a source of revenue to the government and it is also a coercive
exploration to the payers. It is also an instrument for the fiscal policy
either for expectionary or contractionary.
When it is expectionary
the government expenditure increases, the income increases, the consumption
increases, thus resulting to investment multiplier and employment increase. In
other way, increase in government expenditure lead to increase in taxation
which can lead to reduction in investment and consumption reduce and employment
reduces.
In every society, there exists a direct relationship
between the levels of needs and the amount of resources of its socio-economic
development. For this reason taxation, has become what might be called a necessary
evil”, this is so because the burden of development is shared among the
populace according to their incomes expectedly earned during a given period
their property and/or their consumption. It is “evil” in the sense that, it is
inconvenient to part with an amount of money which cannot decide.
As society continues to grow in size and the levels
of needs of the populace increases man began to adopt system of taxation that
is equitable of generating sufficient revenue that is commensurate to the need
level. As a result of growth of fiscal group, governments have been encouraging
individuals and corporate bodies to undertake certain community development
projects and services as part of their social responsibility initiatives.
The purpose of this
project is to examine the impact of tax as a source of revenue with reference
to Lagos State Board of Internal Revenue.
This objective of the
project is to evaluate the economic implication of taxation in the state. It
also examine the effectiveness of Lagos State Board of internal Revenue.
Each chapter contains
comprehensive statement and principle together with relevant references.
TABLE OF CONTENT
CHAPTER
ONE
INTRODUCTION
1.0 Background of the Study
1.1 Statement of the Problem
1.2 Objectives of the Study
1.3 Significance of the Study
1.4 Research Questions
1.5 Research Hypothesis
1.6 Scope and Limitations of the Study
1.7 Definition of Terms
CHAPTER
TWO
LITERATURE
REVIEW
2.0 Introduction
2.1 Theoretical Framework
2.2 Principles of Taxation
2.3 Types of Tax
2.4 Impact of Taxation on Economic Development
2.5 Effects of fraudulent Tax Practices on
Economic
Development
2.6 importance of Taxation in Nigeria
2.7 Tax Administration in Nigeria Sources
2.8 Organs of Administration
CHAPTER
THREE
RESEARCH
METHODOLOGY
3.0 Introduction
3.1 Research Design
3.2 Sources of Data
3.3 Population of the Study
3.4 Sample and Sampling Technique
3.5 Method of Data Analysis
CHAPTER
FOUR
DATA
PRESENTATION AND ANALYSIS
4.0 Introduction
4.1 Characteristics of Respondents
4.2 Hypotheses Testing
CHAPTER
FIVE
SUMMARY,
CONCLUSION AND RECOMMENDATIONS
5.0 Summary
5.1 Conclusion
5.2 Recommendations
References
Appendix
CHAPTER ONE
INTRODUCTION
1.0 BACKGROUND OF
THE STUDY
Every known society (ancient or modern) prides its
development and progress on the amount of wealth it could generate sustain and
multiply for effective social, economic and political development.
Sometimes, leaders are observed to maximize these
wealth for their personal glory and ambition. History is replete with tales of
races, tributes and tolls period by a colonized ex-defeated people to their invader.
In modern times, such inversion has taken another name colonialism.
For colonialism, the essence shifts from existing
tributes from the host community to appropriating the vast resources of the
colonies the colonialists have ruled over. The research for invasion is not
different from the reasons for colonialism. Both forms are carried out in order
to undertake some kind of development (social or economic) basic home or
abroad. The colonialization of Nigeria
in the early 20th century by Britain was not to carry out an
expansionist programme, but was in part or plan to ensure that factories and
plants in British cities and towns are not short down due to inadequate supply
of raw materials. A clear case of developing a foreign economy with local
resources are the concept of social or economic development thrives on the
principles of resources generation.
In every society, there exists a direct relationship
between the levels of needs and the amount of resources of its socio-economic
development. For this reason taxation, has become what might be called a
necessary evil”, this is so because the burden of development is shared among
the populace according to their incomes expectedly earned during a given period
their property and/or their consumption. It is “evil” in the sense that, it is
inconvenient to part with an amount of money which cannot decide.
As society continues to grow in size and the levels
of needs of the populace increases man began to adopt system of taxation that
is equitable of generating sufficient revenue that is commensurate to the need
level. As a result of growth of fiscal group, governments have been encouraging
individuals and corporate bodies to undertake certain community development
projects and services as part of their social responsibility initiatives. These
initiative come in various forms such as:
i.
Sponsorship of
games and sports
ii.
Sponsorship of
educational programme through scholarship for indigenous students
iii.
Underwriting
medical bills for helpless victims of fire or chemical bias, or those with
debilitating aliments.
iv.
Construction of
water and electrical projects.
v.
Offering
material and financial assistance to orphanages, deshire homes etc.
vi.
Road or bridge
construction for resurfacing.
vii. Classroom or school blocks construction and donation
of books and reading material for libraries.
viii. Adoption, beautification word junctions and round
about etc.
The financial implications of these activities are
that they are tax deductible. In other words, the taxable income of the
individual or organization are exclusive of the costs of these projects.
Thus, since governments have the responsibility to
provide social amenities for her citizens the purpose of the tax system is to
enable it spread this burden among all its people in an acceptable way.
According to the fairness or equitability of the tax system is best evaluated
on the principles of the payer’s benefits and the ability to pay. As a general
rule. Daughters et al (1980), suggest that income tax records and returns
should be kept together with major expenditures which would verifiable before
they are substrated from income to lower the amount of taxes to be paid to the
government.
1.1 STATEMENT OF
PROBLEMS
The statement of problems could be stated below:
i.
Lack of
compliance by tax payers and
ii.
Challenges of
tax evasion and avoidance
iii.
Ineffectiveness
of machineries put in place for tax collection and administration.
iv.
Sharp practice
by tax efficients leading to reduction in tax remittance.
1.2 OBJECTIVE OF THE
STUDY
The objective of this study shall be based on the
following:
i.
To evaluate the
economic implication of taxation in the state.
ii.
To determine why
government tax officials are collaborators in tax evasion, avoidance and
officer economic malpractices.
iii.
To evaluate the
extent to which the tax system is boosting economic activities.
iv.
To find out why
only corporate bodies take social responsibility initiative.
v.
To assess the
social welfare maximization of the people, the social marginal cost of
taxation, SMC(I) and the social marginal benefit of expenditure SMB(E).
1.3 SIGNIFICANCE OF
THE STUDY
One of the consequent elements of taxation to an
economy is that the payers spending power is limited or reduced the summary
effect of this is that government is exploited to deliver the needed
development to boost social and economic life. The emphasis is on the importance
of taxation on economic life of the people, will not only be significant for
the immediate at future utilization by government and her agencies but also by
research students who might evaluate the finding as reference materials.
1.4 RESEARCH
QUESTION
This study shall provide answers to the following
research questions:
§
What are the
sources of government revenue?
§
What factors
guide government consideration when establishing a tax policy?
§
How does
government ensure that tax is paid by all citizens and organization?
§
What are the
penalties for tax evasion and avoidance
§
What factors
influence the willingness to pay tax by some individuals or organizations?
1.5 STATEMENT OF
HYPOTHESIS
The following hypothesis shall be tested in this
research study:
1. Ho: Taxation
has not contributed to the development in the state.
Hi: Taxation
has contributed to the development in the state.
2. Ho: The role of corrupt government tax
officials has not affected the revenue accruable from taxation.
Hi: The
role of corrupt government tax officials has adversely affected the revenue
accruable from taxation.
3. Ho: The imposition of high and multiple
local taxes would not discourage investment in the state.
Hi: The imposition of high and multiple
local taxes would discourage investment in the state.
1.6 SCOPE AND
LIMITATION OF THE STUDY
The study will embrace mainly officials of
governments in such places as the Lagos State Board of internal Revenue who are
responsible for tax matters in the state. The research study shall be limited
to taxation and its economic effects in Lagos State
and government officials only. The research study shall also be restricted only
to the Lagos
metropolis. Therefore, in the course of carrying out this study, a lot of
challenges were prevented and the principal among these were the following:
finance, time and lack of relevant materials.
1.7 DEFINITION OF
TERMS
Key terms that would be used and would require
further explanation are stated below, these includes:
§
Aggregate Demand: This
is the total spending on the economy. It is the sum of personal consumption
expenditure, business investments and government spending.
§
Tax Avoidance: Using
loophole in the tax law as a cover in order not to pay tax.
§
Tax Evasion: This
is the failure of the tax payer to comply with the tax laws. (It is a criminal
offence).
§
Tax Base: This
is the object of taxation i.e. the economic activity upon which tax is levied.
It could be household’s income, consumption or wealth.
§
Personal Income: The
total money income reserved by individuals before taxes are paid.
§
Fiscal Policy: Refers
to the use of government expenditures, taxation and subsides to influence the
level of economic growth and development.
§
Taxable Income: The
amount of income remaining after subtraction of all allowable deductions and
exemptions that are available for taxation.
§
Diminishing Marginal utility: The gradual dealing in consumer satisfaction that
each additional unit of consumption of a particular goods or services gives.
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