EFFECT OF TAXATION ON ECONOMIC DEVELOPMENT IN NIGERIA.
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EFFECT OF TAXATION ON ECONOMIC DEVELOPMENT IN NIGERIA.
Chapter one
INTRODUCTION
BACKGROUND FOR THE STUDY
Taxation can be defined as the money collected by the government from its citizens in order to produce funds to cover its expenses. Taxes are levied to achieve some of the nation’s economic objectives. Despite the fact that taxes account for a sizable portion of national income, they have historically been a major source of political debate.
The introduction of taxation in Nigeria was prompted by the financial needs of the colonial authority. Customs duties are against direct taxes, which were first introduced in southern Nigeria.
The northern territory was a convenient place to experiment with the system of direct taxation because the people of the area were used to paying taxes under the Fulani administration. Direct taxation was introduced in Ikpoba-Okha Local Government Area of Edo State in the north in 1904.
Taxation was implemented in the western region of Nigeria following the merger of northern and southern Nigeria in 1914. The Yoruba and Binis, who are predominant in the area, already had a well-established tax system.
Taxes differ from other sources or forms of revenue in that they are compulsory levies and unrequired, that is, they are not paid in exchange for specific things such as the sale of public property or the issuance of public debt, whereas taxes are presumed to be collected for the sake of the taxpayer’s welfare, regardless of the benefit received. They are a significant exception to this generalisation.
Payroll taxes are routinely placed on labour income to fund retirement benefits, medical expenses, and other social security programmes.
Customs duties, excess tariffs, purchase taxes, income taxes, collaboration, proportional taxation, and fiscal policy are all forms of taxation. This is to produce revenue for the government’s pursuit.
No nation can thrive without finances; taxation is one of the government’s primary sources of revenue; when a country’s national income is high, so is its per capita income. As a result, individuals and citizens in such countries will have a higher standard of living.
This can spur economic growth and progress. Direct taxation has the direct and immediate effect of reducing the income of the person who is taxed. This means that the higher the personal or corporate tax, the lesser the retained income and thus the chance of saving. Uniamakagbe (2006).
Taxation is critical to the economic success of Edo state and Nigeria in general. In terms of social infrastructure, such as school construction, electricity provision, road construction, and so on.
Taxation has a significant impact on the economic development of Edo state and Nigeria in general since it reduces the purchasing power of taxpayers, leads to monopolies, and ultimately narrows the choice of commodities in the market.
1.2 Statement of Problem
It has been observed that the term “declaration of income” is quite common among self-employed individuals.
Because of widespread tax illiteracy, most citizens and government officials in Edo state’s ikpoba-okha local government area are unaware of the need of paying taxes.
There are differing perspectives on the function of tax payment in economic development. This study is an attempt to investigate and assess its impact on development.
1.3 PURPOSE OF THE STUDY
The goal is to investigate the impact of taxation on the economic growth of the Ikpoba-Okha local government area in Edo state.
To accomplish this, five particular objectives are outlined as follows:
To identify the many types of taxes.
To examine the government’s revenue from taxation between 2002 and 2005 in Edo State’s Ikpoba-Okha Local Government Area.
To assess the impact of taxes on the state’s economic development between 2002 and 2005.
To recommend solutions to some of the challenges associated with tax collection.
To highlight the benefits of tax income.
1.4 RESEARCH QUESTIONS
1. How does taxation affect economic growth in Edo State’s Ikpoba-Okha Local Government Area?
2. Does taxation cause persons in Edo State’s Ikpoba-Okha Local Government Area to disclose incorrect salary and wage information?
3. Does taxation help the government provide social amenities in Edo State’s Ikpoba-Okha Local Government Area?
1.5 Significance of the Study
The study will provide information on how tax revenue is used to fund social facilities and road repair. Furthermore, importance to government institutions, stakeholders, revenue organisations, and research facilities.
1.7 Definition of Terms
Direct taxes are levied directly on an individual’s or business’s revenue.
Indirect taxes are levied on products and services.
Customs duties: These are taxes levied on commodities supplied to foreign countries.
Fiscal policy is the employment of government tax and spending policies to influence economic activity.
Progressive tax: A government imposes an obligatory tax on individuals based on their abilities. Consider P.A.Y.E. (pay as you earn).
Does taxation promote development? Yes (), no ().
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