EFFECT OF TAX ADMINISTRATION ON INFRASTRUCTURAL DEVELOPMENT IN OGUN STATE
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EFFECT OF TAX ADMINISTRATION ON INFRASTRUCTURAL DEVELOPMENT IN OGUN STATE
1. Introduction
The rising expense of running government, combined with declining revenue, has prompted different state governments in Nigeria to devise revenue-boosting initiatives. Furthermore, the near-collapse of the national economy has caused significant financial stress for all levels of government.
Despite the fact that the Nigeria 1999 constitution specifies multiple revenue sources for the various levels of government, petroleum has provided more than 80% of the three tiers of government’s annual revenue since the 1970s.
However, the significant drop in the price of oil in recent years has reduced the revenues available for distribution to the states. The necessity for state and municipal governments to produce appropriate revenue from domestic sources has thus become an urgent and critical issue.
This need highlights the eagerness of state and local governments, as well as the federal government, to seek new sources of revenue or to become more aggressive and imaginative in their collection of money from existing sources.
Development is essential for modern society. To carry out development in the nooks and crannies of society, the Ogun State Government must provide direct development to people to a certain level.
Development is related with cash, and a significant amount of revenue is required to design, implement, and maintain state infrastructure. Taxes, royalties, haulages
fines, and grants from state, national, and international governments provide the necessary money for developmental initiatives such as the construction of accessible highways, public schools, health care centres, and bridges.
These monies could be obtained internally or elsewhere. As a result, the Ogun state government cannot embark on, execute, or potentially maintain these projects without proper tax management.
The Ogun state administration announced plans to spend N390 billion ($3 billion) on infrastructure development in the state over the next few years. Speaking at a town hall meeting of the Ogun State Internal Revenue Service (LIRS) for market associations, general merchants, skilled technicians, and others, the Governor of Ogun State, Mr Babatunde Raji Fashola, revealed that massive funds are required to build the necessary infrastructure to make life easier in the state.
He stated, “The project on the agenda of the state administration requires significant funding. Over the next two decades, Ogun state must spend at least N390 billion ($3 billion) per year to develop and upgrade its water supply network. N2.6 trillion ($20 billion) to establish a quality and efficient road and drainage network;
N1.3 trillion ($10 billion) for electricity supply; N650 billion ($5 billion) for information and computer technology; and N1.2 trillion ($9.3 billion) for an intermodal transportation system.”
To that aim, he urged artisans and other professionals in the state to pay their taxes so that the government could meet its intentions to develop and improve the state’s social amenities.
He said that the state government has put in place procedures to prevent tax evasion and ensure that people and corporations pay the correct tax.
He added that the state’s new revenue administration statute requires a tax clearance check before any individual or corporate body may do business with, obtain a licence, or receive other advantages from the state government.
Tax administration in Nigerian local governments is primarily based on TAX. As a result, taxation serves as an internal source of government revenue in the domestic economy. Its collection and service to the government are essentially determined by the government itself.
Taxation has been described in a variety of ways, but for the purposes of this study, it will be defined as a compulsory levy imposed on a subject or his property by the government, which has authority over his property through its agencies
with the goal of providing, maintaining, and improving social facilities in the community at large, for which the tax payer receives no compensation.
This study will explore the effects of tax administration on infrastructure development in Ogun state by answering the following research questions:
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