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TAXATION AS AN ALTERNATIVE INSTRUMENT FOR ECONOMIC GROWTH IN NIGERIA 2000-2014

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EVALUATE TAXATION AS AN ALTERNATIVE INSTRUMENT FOR ECONOMIC GROWTH IN NIGERIA 2000-2014

CHAPTER ONE

  • INTRODUCTION

1.1     BACKGROUND OF THE STUDY

According to Black Law Dictionary, tax is a ratable portion of the produce of the property and labour of the individual citizen, taken by the nation, in the exercise of it’s sovereign right, for the support of government, for the laws, and as the means for continuing in operation the various legitimate function of the state. The Institute of Taxation of Nigeria (2002) viewed tax as ‘an imposed or enforced contribution of money, enacted pursuant to legislative authority. If there is no valid statute by which it is imposed, a charge is not tax’.

Tax is assessed in accordance with some reasonable rule of apportionment on a persons or property within jurisdiction. Sanni (2007) advocated tax as an instrument of social engineering which can be used to stimulate general or special economic growth. Nigeria is richly blessed with oil and gas among other mineral resources, but the over dependence on oil revenue for the economic growth and development of the country has left much to be desired.

According to Ariyo (1997) he posited that “Nigeria over dependence on oil revenue to the total neglect of other revenue source was encouraged by the oil boom of 1974. This is unsustainable due to the fluctuation in the oil market which have in most cases plunged the nation into deficit budget”. It was the view of Popoola (2009) that, Nigeria tax administration and practice be structured towards economic goal achievement since government budget for the year centers on the oil sector.

While decrying the low productivity of Nigerian tax system, “deficiencies in the tax administration and collection system, complex legislations and apathy on the part of those outside the tax net” were identified as some of the root causes. Ijewere (1991) and Ndekwu (1991) as cited in Ariyo (1997). The incessant unemployment and lack of basic infrastructure in major parts of the country are product of poor tax system which could have provided for alternative source of revenue. The sudden mega city status attained by Lagos State was as a result of a well structured tax system which has helped in the growth and development of the state.

With the growing population of the country, the government need to develop alternative streams of financial relief aside from crude oil in other to combat the increasing need for welfare and security services of her populace. Section 14 (29) of the 1999 constitution states ‘the security and welfare of the people shall be the primary purpose of government…’ (Olaoye 2008).

Taxation can play a significant role in advancing the growth of the economy if it is well structure and money accrued from it are channeled towards infrastructure and social amenities. Proper mobilization of resources from taxation is seen as the key to unlocking public investment, unemployment and overall economic growth. Government must also take care in curbing tax evasion and avoidance which is common among Nigerian. Country like Britain majorly depends on tax to generate revenue and provide basic needs for her citizens.

Therefore, a well structured tax administrative system would in a long way address the inadequate financial resources which is needed for economic growth and development.

 

1.2    STATEMENT OF THE PROBLEM

For any government to achieve it’s primary function of providing essential services (security and welfare) to the people of her country, a sustainable revenue generation policy must be adopted in other to grow and develop.

One of the greatest challenges of the government of today is lack of basic amenities, wealth redistribution to establish equality and also to create another major source of financial income aside from oil. One major question the government of today need to answer is when the black gold (crude oil) Well dries up today, how do we survive as a nation?

The Nigerian economy is a ‘mono-economy’ which mainly depend on one commodity which is oil. Though, oil still stand as the major source of foreign exchange of the country which implied that, government earn most of her income through oil taxes, but since it is not the only method of generating revenue, this has been a failure of successive administration in the country who have shy away from other sources.

 

1.3     OBJECTIVE OF THE STUDY

The overall objective of the study is to evaluate taxation as an alternative instrument for economic growth in Nigeria with a view of suggesting some solving measures, the specific objectives are;

  • To examine ways in which more revenue could be generated through taxation.
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Updated: April 2, 2016 — 9:37 am

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