EFFECTIVENESS OF TAXATION IN NIGERIA IN COMPARISON WITH OTHER NATIONS OF THE WORLD
The research work effectiveness of taxation in Nigeria in comparison with other nations of the world aimed at finding out if Nigeria’s taxation system is effective; the study came up with the objectives to compare Nigeria’s taxation system with other Nations of the world, examine the effect of an effective taxation system, to examine the implications poor taxing in Nigeria, to recommend ways of reducing tax evasion in Nigeria. The study made use of primary data which was obtained from the distribution of research questionnaires. The sample size for the study was 60. The study made use of spearman correlation method to determine the effectiveness of the Nigeria taxation system. The study concluded that Nigeria’s taxation system is effective. Recommendations were made to assist the federal government of Nigeria in tax administration and budget planning.
TABLE OF CONTENT
Table of content
1.1 Background of study
1.2 Statement of problems
1.3 Objectives of Research
1.4 Scope and limitations
1.5 Research questions
1.6 Significance of study
1.7 Definition of Terms
2.1 The history of taxation in Nigeria
2.2 Literature Review and Theoretical Issues
2.3 Problems of Tax Collection
2.4 Prospects of Tax Collection
2.5 Characteristics of Good Tax System
2.6 Driving Institutions to tax policy and tax administration in Nigeria
2.7 Theoretical Issues
3.1 research design
3.2 population of study
3.3 sample size/sample technique
3.4 research instrument:
3.5 validity and reliability of instrument
3.6 sources of data collection
3.7 method/techniques of data analysis
3.8 limitations of the methodology
Data Presentation and Analysis
4.3 Test of Hypothesis
1.1. Background of the study
Taxation to every country is bedrock for revenue generation which when adequately carried out could lead to a speedy socio economic development just like in the advanced nations of the world. Ariwodola (2001) described tax as a compulsory levy imposed by the government authority through its agents on its subjects or his property to achieve some goals. Arnold and Mclntyre, (2002) define tax as a compulsory levy on income, consumption and production of goods and services as provided by the relevant legislation. Tax is a charge imposed by government authority upon property, individuals, or transactions to raise money for public purposes. This definition is however imperfect. The study of the teachings of Christianity, Islamic and other prominent religions in the world shows that tax is a religious duty based on social and civil responsibilities (Agbetunde 2004). They all support and encourage tax imposition either to redistribute wealth or to finance government project. The Nigerian tax administration is in line with the British model of tax administration since 1960 and has been operating this up to 1990 when the self-assessment scheme came into play which seems similar to the American model of tax administration system (Adesola 2004). The British model of tax administration assumes tax payers are incompetent as to tax process and tax authorities do not rely on information supplied by tax payers. Returns of the tax payer are carefully verified through the application of the American model in reference to the rigid British model. The American model despite the advantages that can be derived from its application has not found a good place in Nigeria because all the phenomenon that made it a success in America such as voluntary compliance system, competence of tax payer, efficient data processing system which aids detection of fraud are still not present the Nigeria context. Consequently disadvantage has adversely impacted on local government tax system since they are part of the ruling process in the state. Such impact has generally been based on problems associated with collection, assessment and returns procedures in the local government area. There is doubt on how efficient the tax authority and other bodies participating in the collection of tax and make returns to the local and state government. In an economy like Nigeria where great reliance is placed on one source of revenue by the state government, the understanding and appreciation of the significance of tax as a source of revenue is of paramount importance. This is not only to enable one the opportunity to examine potential revenue generated in the state but to enable the decision makers and government to appreciate the need for administration changes within the context of tax system. In this study, effort was made to assess Lagos State tax administration system and how it could serve as a veritable tool for revenue generation of the state. The result of the study shows that tax administration affects the revenue generated by the government and that there is a significant relationship between tax administration, tax policies and tax laws.
1.2. Statement of the general problem
Ineffective taxation has greatly hampered Nigeria’s economic development. Most advanced nations in the world today do not joke with their taxation system as they have an effective tax system. There are minimal cases of tax evasion in these nations and that why they are more developed when compared with their African counterparts. Nigeria tax policies have seen many organizations evade tax or pay less than what they are supposed to pay which has greatly affected the internally revenue generated to enhance development.
1.3. Objectives of the study
The following would be the aims and objectives of the study
1. To compare Nigeria’s taxation system with other Nations of the world.
2. To examine the effect of an effective taxation system.
3. To identify ways Nigeria taxation system can be improved upon.
4. To examine the implications poor taxing in Nigeria.
5. To recommend ways of reducing tax evasion in Nigeria.
1.4. Research Questions
1. What are the similarities and difference between Nigeria’s taxing system and their counterparts?
2. What is the effect of having an effective taxation system?
3. What are the ways our taxation system can be improved upon?
4. What are the implications of poor taxing in Nigeria?
1.5. Research hypothesis
H0: Nigeria’s taxation system is not effective
H1: Nigeria’s taxation system is effective
1.6. Significance of the study
This study would be beneficial to the government in helping them draft a holistic tax policy that would help boost revenue and ensure development. This study would also be of importance to researchers and students who are interested in Nigeria taxation system and its comparison to other countries of the world.
1.7. Scope and limitation of the study
This study is restricted to the effectiveness of taxation in Nigeria in comparison with other nations of the world.
Limitations of the study
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
Adebayo, A. (1970): Local Government Finance in Nigeria: Problems and Prospects, Ile-Ife: University of Ife Press Ltd.
Adedokun, A.A.(2004):The Development of Local Government in Nigeria since Pre-Colonial Era to 1999 Constitution. Polycom Journal, Vol.2, No. 2, Pg115-120.
Adesola, S.M. (2004): Income Tax Law and Administration in Nigeria, Ile-Ife: University of Ife Press Ltd.
Adejuwon, J. A. (1998): Analysis of Tax Principles for Nigerian Students, Lagos: Adejuwon and Co– Publishers.
Agbetunde, L. A. (2010): Principles and Practice of Nigerian Personal Income Tax, Lagos: 2nd ed. ELToda Venture Ltd.
Ariyo, A. (1997): Productivity of the Nigerian Tax System: 1970-1990’ African Economics Research Consortium (AFRC), Nairobi, Research Paper 67, 1997.
Arnold, J. B. &Mclntyre, J. M. (2002) International Tax Primer, Second edition, Kluwer Law International, The Hague, the Netherlands..