THE REVENUE OF TAXATION AND THE IMPACT ON THE ECONOMIC GROWTH AND DEVELOPMENT AS A STRATEGY DESIGNED FROM FEDERAL INLAND REVENUE SERVICES

THE REVENUE OF TAXATION AND THE IMPACT ON THE ECONOMIC GROWTH AND DEVELOPMENT AS A STRATEGY DESIGNED FROM FEDERAL INLAND REVENUE SERVICES

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CHAPTER ONE

1.0         Background to the Study

Taxation as a concept involves more than mere imposition of compulsory payment of sums of money by the government and its agents. It is the sum total of compulsory sum of money by the government or its agencies on individuals and firms. The collection of and the accounting for the levied amounts and keeping and editing of tax records. The sum of money levied could be in the form of direct taxes or indirect taxes. However, the essence of taxation is to raise the revenue of meeting part of the government expenditure or for providing economic and social benefits to the public and for the purpose of controlling the economy. Therefore, a tax is compulsory sum levied by the government or its agencies on individual and firms on goods and services for the purpose of meeting the cost of its expenditure or for providing economic and social benefits to the public.

There is no state that can be effective unless it enjoy some degree of financial independence; this financial independence can be achieved through taxation. Tax payment has been in existence since pre-colonial era and after independence 1960.

The success or failure of a local government depends upon its financial resources and management so also other levels of government.

Furthermore, the government cannot function effectively without funds for the government to achieve functioning; it needs the support of the citizens. The general public exacts much resources from the government through its agencies, these services can only be provided if sufficient funds through various imposition of taxes and various laws, acts, legislation and decrees. In order to achieve this, authorities makes the individuals to pay certain percentage of every income earned, the system is referred to as payee.

Basically, taxes consulted over 90% of government revenue through which the federal inland revenue is the major ministry that generates money like companies pay their taxes through Nigeria inland revenue –wrote bodies just to mention but few.

1.2 Statement of the Problem

This focus on the Nigeria federal board of inland revenue and local government secretaries which is bounded by all financial transactions that is if they work collectively to collect the funds and levied to meet up the demand of the people and meet up the demand of the people and off-set some economic problems.

It is not easily tackled because not everybody pays taxes almost poor and rich pays the same thing and some business men are not paying taxes thereby causing some confusion.

Taxes as an extraction of surplus, the Nigeria federal inland revenue services should employ extra manpower which they will use to collect taxes irrespective of their excuses and let people know that taxes are sacrifice and act of commitment and patriotism according to Adam Smith (1776).

1.3 Objectives of the Study

i.                   This will take us to know whether the Federal Inland Revenue service contributed to the growth and development.

ii.                 To examine also the relevance of taxes collection in the country at large.

iii.              To work towards the realization of its set goals and objectives.

iv.              To find out if other sources of revenue plays more impact in our economy.

v.                 In order to bring about economic stability and favourable balance of payment.

1.4 Research Hypothesis

-         Ho: VAT is not a veritable tool for economic growth.

-         H1: VAT is veritable tool for economic growth.

1.1             Significance of the Study

A study of this nature is important as it is intended to bring to the forth, the revenue of taxation and the impact on the economic growth and development as a strategy designed from federal inland revenue services on the job towards meeting the objectives of its goal. This study is important as an academic exercise writing of the future pursuit, where other researchers can carry out their work on similar study.

Finally, the study could be explained as forming a vital requirement for the successful completion of my course of study with the polytechnic.

1.2            Scope and Limitation of the Study

Scope of the Study

This research essay relates only to the federal Inland Revenue Services Abuja, one of the leaders in the revenue collector to the federal government. A study of this nature can be carried out to federal, state, and local government spread across Nigeria. (2006-2010).

Limitation of the Study

Limitation of the study cannot factors that in anyway hampers the smooth completion of this study. Although high degree of success has been achieved in data collection but not without problems – for instance, the uncompressing attitudes of the officials of the federal inland revenue services in giving useful and vital information relevant to the study, like time consuming etc.

Direct taxes: these are taxes levied on the income of individuals and on their property. Such income would includes wages, salaries, profit, rent and interest, the incidence of indirect taxes falls directly on the payer.

Research Hypothesis

-         Ho: VAT is not a veritable tool for economic growth.

-         H1: VAT is veritable tool for economic growth.

1.3                                                Definition of term

a.      Ude E. Agu G. G. (1989) define taxes as a compulsory payment made by each eligible citizen towards the expenditure of the state. Tax is levied by the government without regards to the specific benefits that individual tax payers may receive.

b.     Joseph V. Carcello (2008). Defines revenue or turnover as the income that company receives from its normal business the scale of goods and services to customers. In many countries and states, revenue is refered to as turnover. Some companies receive revenue from interest, royalties or other fees.

c.      Statistic on growth of the global Gross Domestic Product (GDP) from (2003-2013) defines economic growth as the increase in the market value of the goods and services produced by an economy overtime. It is conventionally measured as the percent rate of increase in real Gross domestic Product or real GDP.

d.     Gyang P. Y. (2012). An insight into nigerain taxation system sees tax evaluation as the use of illegal methods to reduce or completely dodge one’s tax liability e.g. mis-stating or omitting a source or sources of one’s income.

e.      Gyang P. Y. (2012). An insight into nigerain taxation system sees tax avoidance as the use of legally permitted methods purposely to minimize the amount of tax payable. E.g. employing the services of a tax consultant or lawyer to study the loopholes in the tax laws and help the tax payer produce the amount of tax payable.


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