EFFECT OF INTERNAL GENERATED REVENUE (IGR) ON LOCAL GOVERNMENT SERVICE DELIVERY: A CASE STUDY OF KEFFI LOCAL GOVERNMENT NASSARAWA STATE

EFFECT OF INTERNAL GENERATED REVENUE (IGR) ON LOCAL GOVERNMENT SERVICE DELIVERY: A CASE STUDY OF KEFFI LOCAL GOVERNMENT NASSARAWA STATE

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ABSTRACT

The study on the effect of internal generated revenue (IGR) on local government service delivery aimed at evaluating the relationship between internally generated revenue (IGR) and local government service delivery in Keffi L.G.A, Nassarawa State, to determine the impact of the local government revenue administration policy on its service delivery in Keffi L.G.A, Nassarawa State, to examine whether tax evasion and avoidance affects the local government service delivery in Keffi L.G.A, Nassarawa State, to investigate on the factors affecting internal generated revenue (IGR) in local governments in in Keffi L.G.A, Nassarawa State. The study made use of primary data which are gotten from the distribution of the research questionnaires; the sample size for the study is 100. The study made use of the Pearson correlation method for the analysis. The study therefore concluded that there is a statistically significantly (0.00) strong relationship (0.819) between the responses of the respondents that said that there is significant relationship between internally generated revenue (IGR) and local government service delivery in Keffi L.G.A, Nassarawa State and those that said that the Keffi local government service delivery has improved with increase in internally generated revenue. The study also made useful recommendation to assist the federal government in decision making

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF STUDY

Nigeria is a country blessed with 774 local government areas; these local government areas play their roles in revenue generation (internally). The revenue generated from most of the local government areas help in socio-economic and infrastructural development in Nigeria. That is to say that most emerging economy, infrastructures, whether social or economical, is one of the many areas with air of expectation and great curiosity. The reason for such curiosity, in summary is that, infrastructure is the oil in the wheel of progress of a nation’s economy; be it economic, political, social, cultural or socio-cultural progress.

 According to Oteh (2010), infrastructure, which is the physical assets and services, are fundamental to the growth and development of an economy. By this assertion, infrastructure is considered a necessary facilitator of the growth and development process vis-à-vis industrial transformation of a country. It therefore follows that, any nation that wants to grow and developed, must make infrastructure a priority and policy issue. However, it is one thing to place much emphasis on the development of infrastructure and another thing to have enough funds to finance infrastructural development. Although there are several sources of revenue (federal government allocation, corporate donations, individual donation, etc.), internally generated revenue (IGR) is one source which every state is expected to fully exploit to complement other. Commenting on the importance of IGR in infrastructural financing, the Nigerian, Dr. President – Goodluck Ebele Asikiwe Johnathan in his speech during the 1st International Tax Conference held in Abuja on 27th October, 2008 to said that:

There is no better time but now for Nigeria to put the issue of diversification of revenue away from oil on the front burner…for a nation to carry out basic functions of government, pursue and implement her development programmes like our “vision 202020”…it requires a stable, predictable and sustainable sources of revenue. This leaves us with a very limited choice other than to subscribe to international best practices and make ‘IGR’ (taxation) the primary source of revenue of government…this is crucial in view of the fact that the so called diversification from dependence on oil as the principal source of revenue is applicable to the three tiers of government as State and LGAs should henceforth depend less on handouts from FAAC and intensify their IGR drive.

Akpo (2009) further highlighted the importance of using IGR to fund infrastructures. According to the authors, IGR does not develop hyper-inflation, it is free and does not carry any burden of repayment and interest like domestic borrowing and loan; through tax, IGR serves as the nerve centre of the social contract, it makes government more responsible and more responsive to the needs of the people, it serves as a tool for economic development, it is an important consideration in the planning of savings and investment and a powerful fiscal weapon to plan and direct the economy. IGR also serves as a tool for social engineering, it goes a long way to keep the society moving, because as government gets more revenue and commission more projects, more money is put in circulation, more employment opportunities arise and more business opportunities are created which impact positively on generality of the society.

         On the other hand over the years, meaningful local government developmental efforts in Nigeria, have suffered a lot of setbacks due to excessive control of this level of government by the state and federal governments. This development has restricted the fiscal jurisdiction of local governments as well as negatively rubbed on their autonomy. As such, the financial resources available to them as a level of government have continued to dwindle, hence, remain grossly inadequate to carry out the functions for which they have been created. However, the first major attempt at comprehensively looking at the finance of Nigerian local governments took place in 1976, through the introduction of the 1976 guideline for local government reforms initiated by the Murtala/Obasanjo military regime. The reforms and the 1979 constitution of the Federal Republic of Nigeria identified reasonably adequate sources of revenue for the local governments. These are the mandatory statutory allocations from the Federal and State governments, aside other internal revenue generation sources. The 1976 Nation-wide reforms of the local government system in Nigeria apparently provided a panacea for all the structural problems of this level of government. It is to this regard that study desired to determine the effect of internal generated revenue on local government service delivery using Keffi L.G.A, Nassarawa State as the case study.

1.2 STATEMENT OF PROBLEM

The major source of revenue generation in Keffi L.G.A, Nassarawa State is through tax; revenue from taxation plays a significant role in socio-economic development of Nigeria and her local government. Some of the problems facing the local government service delivery in terms of revenue generation could be from poor local government administration, tax evasion and avoidance and misappropriation of local government revenue and funds. Finally, there have been series of studies on internal generated revenue (IGR) but not even a single study has been carried out on the effect of IGR internal generated revenue on local government service delivery.

1.3 AIM AND OBJECTIVES OF STUDY

The main aim of the research work is to determine the effect of internal generated revenue (IGR) on local government service delivery. Other specific objectives of the study are:

1.  to determine the relationship between internally generated revenue (IGR) and local government service delivery in Keffi L.G.A, Nassarawa State

2.  to determine the impact of the local government revenue administration policy on its service delivery in Keffi L.G.A, Nassarawa State

3.  to examine whether tax evasion and avoidance affects the local government service delivery in Keffi L.G.A, Nassarawa State

4.  to investigate on the factors affecting internal generated revenue (IGR) in local governments in in Keffi L.G.A, Nassarawa State

5.   to proffer solution to the above stated problem

1.4 RESEARCH QUESTIONS

The study came up with research questions so as to ascertain the above stated objectives of the study. The research questions for the study are:

1.  What is the relationship between internally generated revenue (IGR) and local government service delivery in Keffi L.G.A, Nassarawa State?

2.  What is the impact of the local government revenue administration policy on its service delivery in Keffi L.G.A, Nassarawa State?

3.  Does tax evasion and avoidance affect the local government service delivery in Keffi L.G.A, Nassarawa State?

4.  What are the factors affecting internal generated revenue (IGR) in local governments in Nigeria in Keffi L.G.A, Nassarawa State?

1.5 STATEMENT OF RESEARCH HYPOTHESIS

H0: there is no significant relationship between internally generated revenue (IGR) and local government service delivery in Keffi L.G.A, Nassarawa State

H1: there is significant relationship between internally generated revenue (IGR) and local government service delivery in Keffi L.G.A, Nassarawa State

1.6 SIGNIFICANCE OF STUDY

The study on the effect of internal generated revenue (IGR) on local government service delivery will be of immense benefit to Keffi L.G.A, Nassarawa State in the sense that the study will educate the local government on service delivery and the management of internally generated revenue (IGR). The study will serve as a repository of information to the local governments in Nigeria and other researchers that desire to carry out similar research on the above topic. Finally the study will contribute to the body of existing literature and knowledge in this field of study and provide a basis for further research

1.7 SCOPE OF STUDY

The study will focus on in Keffi L.G.A, Nassarawa State out of the seven hundred and seventy four (774) local government areas in Nigeria. The study will cover on service delivery and the management of internally generated revenue (IGR) in local governments in Nigeria.

1.8 LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work

1.9 DEFINITION OF TERMS

Revenue: revenue is the income that a business has from its normal business activities, usually from the sale of goods and services to customers.

Tax: A tax is a mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures. 


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