TAX AS A MEANS OF INCOME REDISTRIBUTION IN NIGERIA
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TAX AS A MEANS OF INCOME REDISTRIBUTION IN NIGERIA
TAXATION AS A METHOD OF INCOME REDISTRIBUTION IN NIGERIA
According to the universal library in volume seven, income redistribution in Nigeria is the proportion of national income going to wage workers, which demonstrates individual disparities in accumulated income.
Taxation allows us to determine our taxable income. This study is primarily being conducted to establish whether or not we are being overcharged and to ascertain the effect of taxation as a form of redistribution in Nigeria. It informs the reader on how, why, and when taxes were implemented, as well as what taxes are all about.
The introduction, background of the study, statement of the problem, purpose of the study, significance of the study, scope and limitation of the study, definition of words, and references are all included in Chapter I.
Chapter II provides an overview of tax kinds, taxing authorities, and references. Chapter III covers research metrology, data collection methods, secondary data, investigation methods, data placement, and analysis tools.
Chapter IV contains a summary of the findings, the general advantage of taxation, and references. Conclusion, recommendation, and bibliography in Chapter V.
CHAPTER ONE
1.1 INTRODUCTION
As everyone has his or her own goal of acquiring income and demonstrating how he or she has income over the other, the need for taxation evolved as a means by which some component of the individual, firms, and cooperative organisations were taxed and a small amount was restrained from the expense of the stages.
Thus, by taxing or reducing portion of an individual’s, company’s, or cooperative organization’s revenue, the remaining are accused of knowing how the individual is doing.
Although taxation can be traced back to pre-colonial times in Nigeria. Meanwhile, tax collection and administration were often handled by the Emir, chief, and their designated agents. The system was relatively functional for the period, although it was incredibly arbitrary.
By that time, tax collecting had progressed from the northern to the southern states of the country.
Around 1900, the administration of tax was changed by many revising ordinances (non Acts and Decrees), which primarily delegated the role of tax collection to local authorities.
Income tax was initially implemented in Nigeria’s northern region in 1904 by law Lugard. Income tax was also implemented in some parts of western Nigeria as a result of an updated legislation passed in 1918.
Due to considerable resentment of the makeup of that portion of the country, income tax was not imposed in the Eastern region of Nigeria until the late 1920s.
However, what is now known as the contemporary system of income taxation in our country was established in 1940 with the passage of Direct Taxation Ordinance No. 29 of 1943.
Personal income tax in its current and progressive form was instituted in Nigeria by ordinance in 1943, but administration and collection of tax was still shared between the British and local administrations.
1.2 STATEMENT OF THE PROBLEM
Some instances where tax studies may not help to reveal any changes or where the practise may be interrupted include places where there is non-compliance and they include.
(a) The falsification of financial documents
(a) Failure to file annual income tax returns
(c) Based on reported earnings
(c) Failure to list all benefits in terms of types.
(f) Failure to make emt sources judgements.
(f) Making an incorrect claim for a dedication, tax credit, or expenditures.
1.3 OBJECTIVES OF THE STUDY
Since taxation is all about increasing the government’s income or revenue, it is evident and critical that taxation be studied for a variety of reasons, including
(1) To learn how taxes can be used to minimise income inequality.
(2) To ascertain whether consumption of things regarded as damaging in taxation
(3) To understand how taxes are used to generate money for the government.
(4) To demonstrate how tax export promotion tactics work.
(5) To learn how taxes are used to control inflation.
(6) To learn how taxes are utilised to protect emerging industries.
1.4 RESEARCH QUESTIONS
(1) How can taxes be used to minimise income inequality?
(2) How would commodity consumption be viewed as damaging under taxation?
(3) How may taxes be used to generate revenue for the government?
(4) What effect will taxation have on export promotion strategies?
(5) How may taxes be utilised to curb inflation?
(6) How may taxes be used to protect emerging industries?
1.4 THE SIGNIFICANCE OF THE STUDY
This study endeavour will be extremely beneficial to the academic community because it will stimulate future research.
It will also be extremely beneficial to the federal government of Nigeria in the context of Nigeria’s taxation efforts.
The federal government appreciates it as well because it is used to regulate economic inflection points.
When there is inflation in the economy, the government can tax away the excess revenue in the society’s lands, reducing aggregate demand and eventually losing the price spiral in the economy.
They also employ taxation to support economic growth and development. This might be accomplished by tax incentives for investors, tax concessions, and tax holidays for new enterprises or investors, all of which could contribute to industrialisation and economic development.
This tax problem assists the federal government in meeting its social, economic, and political commitments, such as establishing schools, hospitals, and good roads, as well as protecting the public from internal and external aggression, among other things. The government raises revenue through the use of taxation.
This investigation, however, will be expanded to the powers of local government and the federal government on how they use tax to carry out their distribution duties in Nigeria.
1.6 DEFINITIONS OF TERMS
Taxation creates income or revenue for the government, hence it is vital and evident that taxation be researched for a variety of reasons.
1. PROGRESSIVE TAXATION
A tax is said to be progressive if its rate rises in proportion to the amount of income or wealth being taxed. The weight of a progressive income tax falls on people with higher incomes.
E.G Mr. X makes N20,000 and pays N2,000 in year tax, while Mr. Y earns N80,000 and pays N16,00 in annual tax. His tax rate is 20%. In this case, the income axis is progressive, increasing with the rate of income.
11 DIRECT TAXATION
It refers to a tax that is lawfully levied on a person or entity. The weight is assumed to be borne by the one who pays it. That the impact and incidence of taxation fall on the same individual, for example, personal income tax, capital gain tax, petroleum profit tax, and so on.
REGRESSIVE TAX NO. 111
Taxation is said to be regressive since it takes a lesser portion of income as income grows. That is, when income rises, the rate of tale falls. As an example. Mr. A gets N10,000 per year, while Mr. B makes N40,000. Within a year. Mr. A pays N1,000 in tax at a 10% rate, while Mr. B pays N20 at a 5% rate. This is a backward situation.
THE IV INCOME TAX
This is a tax on a person’s, company’s, or organization’s income.
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