TAX AS AN INSTRUMENT OF DEVELOPMENT
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TAX AS AN INSTRUMENT OF DEVELOPMENT
INTRODUCTION TO CHAPTER ONE OF TAX AS A DEVELOPMENT INSTRUMENT IN SOME CREATED STATES
1.1 BACKGROUND TO THE STUDY
A tax is a charge imposed by the government on the income of citizens of a state for which the government provides no direct advantages to the taxpayers. It is also a tax imposed by a state on people who live in the state or make their living there. It could be either a direct or indirect tax.
In general, a tax is said to be direct when both the payment and the burden fall on the same individual; it is indirect when the impact falls on one person but the incidence falls on another.
The majority of government in Nigeria is based on tax revenue generalisation. The proceeds are used for economic, political, and cultural growth.
According to the dictionary, development is the process of having multiple industries and a complicated economic system in a society.
Development is a tool for positive change that raises the standard of living for everyone in the state. To name a few, these changes include the establishment and utilisation of serviceable social amenities, a reduction in crime, an increase in skill and capacity, better organisation, good and efficiency, and cost reduction.
A state is regarded to have achieved progress when it is labelled to manage its affairs as mentioned above. That is, they have attained all-around administration.
As a result, development is defined as a growth in the actual Gross National Product (GNP) over time in a state’s economy.
However, more frequently than not, growth is measured by significant changes in the availability of infrastructures such as good roads, an efficient transportation and communication system, public health, education, and adequate water supply. All of this contributes to raising people’s standard of living.
So development is the ability to interact with the environment in order to give all essentials that will improve people’s standard of existence.
Things like good laws, taxes, and monetary policies Good and efficient economic management, provision of infrastructure, and utilisation are all indicators of development.
The majority of Nigeria’s states are currently underdeveloped. It is considerably worse than in other states because it is new and hence requires a lot of money for development. Governmental amenities were lacking prior to the establishment of the state.
For example, there is a shortage of decent roads, efficient public health, a good and effective communication system, and a good education system. Some progress has been made,
and the researcher wants to know the impact of taxes on government achievement as well as how the efficient use of taxes is measured by the amount to which the entire population, including private enterprises and households, benefits from it.
Taxation promotes increased capital formation, which indicates development. However, the Nigerian government has recently implemented so many modifications in the tax system that a worker earning ten thousand naria per year pays little or no tax.
Personal allowance in the pay as you earn system (PAYE) is now three thousand naria Phi’s fifteen percent of earned income. There is also a children allowance of one thousand five hundred naira per child for a maximum of four children,
as well as a dependent relative allowance of one thousand naira and an insurance allowance, which is the actual amount paid as premium. Aside from the aforementioned, earned income of five thousand and naira is tax-free.
Given the foregoing, one would wonder if taxation is the primary source of government revenue.
1.2 STATEMENT OF THE PROBLEM
In recent years, there has been widespread concern regarding the rate at which some newly established states in Nigeria are developing.
The main issue with this study is to establish a link between tax as an internal source of revenue and the rate of development in some established governments.
1.3 GOAL OF STUDY
The primary goals of the research are to discover and educate:
i. How tax rates influence the rate of economic investment.
ii. The widespread desire for enterprises to invest as a result of tax incentive schemes.
The researcher will also investigate the effects of taxes on small-scale businesses in the state, as well as whether taxes are collected successfully and efficiently. This entails investigating the tax administration and collecting mechanisms.
In general, the task is done to determine if taxes comprise the majority of government revenue in order to dispel the myth that taxes are used by the government to further their own interests.
1.4 THE SIGNIFICANCE OF THE STUDY
One of the most frequently discussed issues in Nigeria is how to overcome the country’s economic difficulties and build an industrial foundation capable of self-sustaining growth and development.
Also, one asks why a country equipped with sufficient human and material resources and on which the people pay taxes has become highly indebted.
As a result, the research is significant in that it will disclose how much development is achieved through taxation as well as the amount to which tax-generated revenues are used to provide essential services to the people.
The research will also indicate whether there are any other better sources of government revenue besides taxes. The study will also aid in a better understanding of the impact of taxes on small businesses in the state.
1.5. DEFINITION OF TERMS
The following are definitions for some of the terms used:
TAX: A compulsory charge imposed by the government on the income of people of a state for which the government provides no direct advantages to the taxpayers.
DEVELOPMENT: This is the ability to cope with the environment in order to give all essentials that will improve people’s level of existence. These include the production and utilisation of suitable social facilities,
the reduction of unemployment, the limitation of population expansion, and the improvement in efficiency and population growth.
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