THE IMPACT OF TAX ADMINISTRATION ON INFRASTRUCTURAL DEVELOPMENT IN THE STATE OF OGUN
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Abstract
The administration of taxes is the fulcrum and path to modern growth. This study evaluated the impact of tax administration on infrastructure development. Utilizing a survey research design and a method of purposive sampling, respondents from the Ogun state Inland Revenue Office were chosen. The research was conducted using questionnaires and statistical data. The analysis was conducted using descriptive and inferential statistics. Descriptive statistics require the use of basic percentages, whereas inferential statistics entail the use of Spearman’s Rank, which is used to indicate the direction of the association between variables in the research and the interval scale for the data. The relationship between income tax and infrastructure development was examined using Spearman’s rank correlation analysis and two hypotheses. The research indicated that income tax and infrastructure development are positively related. The study also revealed the numerous strategies of generating internal revenue, which include tax enforcement staff, contributions, and public education. However, the study’s findings indicate that revenue administration agencies must be reevaluated to increase national revenue.
Infrastructure, Revenue, growth, and administration in Ogun state
1. INTRODUCTION
Various State governments in Nigeria have created initiatives to increase their revenue base in response to the rising cost of running the government and the diminishing revenue. In addition, the near-collapse of the national economy has caused severe financial strain on all levels of government. Despite the diverse sources of revenue accessible to the three tiers of government, as defined in the Nigerian constitution of 1999, more than 80 percent of the annual revenue of the three tiers of government has been derived from petroleum since the 1970s. However, the significant reduction in oil prices over the past few years has reduced the revenues available for state distribution. State and local governments’ need to earn sufficient cash from internal sources has become an issue of the utmost urgency and significance. This requirement highlights the eagerness of state and local governments, as well as the federal government, to seek out new revenue streams or become aggressive and creative in the collection of revenue from existing sources.
Modern civilization is dependent upon progress. It is the responsibility of the Ogun state government to give direct development to people to a certain degree in order to carry out development in all areas of society. Planning, executing, and maintaining infrastructures at the state level requires a substantial amount of revenue. Taxes, royalties, haulages, fines, and grants from the state, national, and international governments create the necessary funds for such development initiatives as the construction of accessible highways, public schools, health care centers, and bridges. These funding could be received from either within or without the organization. Consequently, without adequate tax management, the Ogun state government cannot initiate, execute, and potentially maintain these initiatives.
The Ogun state administration declared its intention to invest N390 billion ($3 billion) in infrastructure development over the next couple of years. During a town hall meeting of the Ogun state Internal Revenue Service (LIRS) for market associations, general merchants, and skilled technicians, among others, the Governor of Ogun state, Mr. Babatunde Raji Fashola, disclosed that enormous funds are needed to put in place the infrastructure that will make life in the state easier.
He stated, “The project on the state’s agenda demands substantial funding. Over the next two decades, Ogun state must invest at least N390 billion ($3 billion) annually to modernize and extend its water supply network. “N2.6 trillion ($20 billion) for a high-quality and efficient road and drainage network; N1.3 trillion ($10 billion) for electricity supply; N650 billion ($5 billion) for information and computer technologies; and N1.2 trillion ($9.3 billion) for an inter-modal transportation system.”
To this aim, he urged the state’s artisans and other professionals to pay their taxes so that the government can implement its plans to build and enhance social amenities.
He said that the state government has implemented efforts to combat tax evasion and ensure that both individuals and businesses pay the correct tax. Before any individual or corporation is permitted to conduct business with, obtain a license from, or receive any advantages from the state government, a tax clearance check is mandated by the state’s new revenue administration statute, he said.
TAX is the primary source for tax administration in Nigeria’s local government. Taxation is therefore an internal source of government revenue within the domestic economy. The government is mostly responsible for its collection and administration. Taxation has been defined in a variety of ways, but for the purposes of this study, it will be viewed as an obligatory levy imposed on a subject or his property by a government with authority over that subject’s property through its agencies for the purpose of providing, maintaining, and improving social facilities in the larger community, for which the tax payer receives no benefit. By answering the following research questions, this study will investigate the effects of tax administration on infrastructure development in Ogun state.
THE IMPACT OF TAX ADMINISTRATION ON INFRASTRUCTURAL DEVELOPMENT IN THE STATE OF OGUN
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