TAXATION AS AN INSTRUMENT OF FISCAL POLICY
(A CASE STUDY OF BOARD OF INTERNAL REVENUE)
This research work was undertaken to find out whether taxation as an instrument of fiscal policy has been able to achieve it’s modern objective fully. The case study of this very project was Enugu State Board of Internal Revenue. In chapter one, I was able to highlight background, the statement of problem, objectives of the study, research hypotheses, research question, significance of the study, scope of the study and limitation of the study. In chapter two some literature textbooks etc were reviewed. In chapter three, the source of data were both primary and secondary source. In chapter four, the data gotten from the questionnaires distributed to both the staff and the management of the board were presented and analyzed. The data were tabulated into frequencies and percentages. The various hypothesis put up in this study were vividly tested using chi-square (X2). Finally, at chapter five, I was able to summarized the findings gotten from the study which states that taxation has been given a deaf ear since the discovery of oil boom. And this resolved into making reasonable recommendation and at last drawn conclusion.
TABLE OF CONTENTS
1.1 Background of the Study
1.2 Statement of Problem
1.3 Objectives of Study
1.4 Research Hypothesis
1.5 Research Questions
1.6 Significance of the Study
1.7 Scope of the Study
1.8 Limitation of the Study
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Origin of Taxation in Nigeria
2.2 Legal Framework of Taxation in Nigeria
2.3 Tax Administration Machineries in Nigeria
2.4 Qualities of A Good Tax System
2.5 Reasons for Imposition of Taxation
2.6 Effect of Taxation in Nigeria Economy
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Research Design
3.2 Area of Study
3.3 Population of the study
3.4 Sampling Method Sample Size Determination
3.5 Research Instruments
3.6 Validity and Reliability of Research Instrument
3.7 Sources of Data
3.8 Analytical Techniques
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Presentation and Analysis of Data
4.2 Testing of Hypothesis
CHAPTER FIVE: SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION
5.1 Summary of Finding
LIST OF TABLES
4.1.1: Table Showing how Progressive tax has been able to Correct the Inequalities in Income Distribution
4.1.2: The Table Show Whether Taxation as an Instrument of Fiscal Policy has been able to close Inflation/ Recessionary gap in the Economy
4.1.3: Table Showing to which Extent the Shifting of Tax Burden from Production to Consumption since the Introduction of VAT has reduce Inflation in the Country
4.1.4: Table showing how reduction of company income tax has increase savings for investment
4.1.5: Table Showing how tax Relief Granted to Individual Tax Prayer has Increase the Standard of Living of such Person
4.1.6: Table explaining how the High Import Duties has been able to protect the Infant Industries in Nigeria.
4.1.7: Table Showing the Extent to which High Tax on Harmful Commodities its Consumption and Production
4.1.8: The table shows How Effective Taxation as an Instrument of Fiscal Policy has been to Nigeria Economy
4.1.9: The table explains how High Tax on Luxurious Goods has close the Inequalities in Income Distribution
4.1.10: The Table Shows the Extent to which tax Evasion and Tax Avoidance Affect Nigeria Economy
4.1.11: The Table Shows whether Taxation is still a good Source of Revenue to Nigeria Economy
4.1.12: The Table Shows whether tax assessment in Nigeria Complied with the canons of a good tax system
4.1.13 The Table shows Whether Taxation is a very Good tool for Curbing Inflation in Nigeria
4.1.14: The Table show Whether Taxation as an Instrument of Fiscal Policy has been able to Achieve its Modern Objectives
1.1 BACKGROUND OF THE STUDY
The economy of any country regardless of its structure is normally regulated by certain policy developed by the government of that country. Fiscal policy deals with the deliberate exercise of government power to tax and expenditure for the purpose of bringing the nation’s output and employment to certain desired level. Tax is a compulsory payment made by individuals, companies or corporations to the government for the actualization of its objectives. Taxation as a instrument of fiscal policy in Nigeria is a process, system or machinery by which individuals, companies or corporations are made to contribute part of their income in some agreed rate to the government for the purpose of administration and development of the society.
Before 1970, taxation was the major source of revenue to Nigeria, but with the discovery of oil in large commercial quantities and it’s rapid monetization, taxation is still and important source of revenue to the Nigeria government.
Taxation being a tool of fiscal policy in Nigeria may be used by the government to achieve the following objectives:-
The redistribution of wealth or income.
To effect changes in the country’s balance of payments with their country.
To effect the mobilization of economic resource.
Influence the level of economic activities and
To Combat inflation.
1.2 STATEMENT OF THE PROBLEM
There are certain problem that many hinder the effect use of taxation as an instrument of fiscal policy which include the following:-
Tax evasion which involves a fraudulent or deceitful effort by a taxpayer to escape a legal obligation.
Tax avoidance which involves manipulating the economic situation by the taxpayer using the legal devices to reduce its tax liabilities.
1.3 OBJECTIVE OF THE STUDY
The ultimate purpose of carrying out a research on this topic- taxation as an instrument of fiscal policy as follows:
To find out whether taxation can be use to close inflationary gap or necessary gap in the economy.
To find out whether progressive tax system can be use for income redistribution among taxpayers.
To find out the impact of tax evasion in the economy.
1.4 RESEARCH HYPOTHESIS
The following hypothical statements are designed to help in the analysis of the results;
H¬1: Taxation as a tool of economic policy can be use to close the inflationary gap in the economy.
H0: Taxation being an instrument of fiscal policy cannot be use to close inflationary gap in the economy.
H¬1: Progressive tax system can be use for income redistribution in Nigeria.
H¬1: Progressive tax system cannot be use for income redistribution in Nigeria.
1.5 RESEARCH QUESTIONS
To achieve the above objectives, some questions will be formulated and direct to the respondents for the answer to be provided for two questions are as follows:
Can taxation be used to close inflationary gap in the economy?
Does the use of progressive tax system correct the inequalities in income distribution in Nigeria economy?
Does tax evasion has great impact in Nigeria economy?
Do you think that taxation is still a good source of revenue to Nigeria economy?
Do you thin that assessment of tax in Nigeria is complying with the cannons of a good a tax system in Nigeria?
1.6 SIGNIFICANCE OF THE STUDY
Taxation as well all known had been the major source of revenue to the Nigeria economy, until 1970’s when oil made taxation to lost it’s fame to the oil sector.
Though taxation is still an important source of revenue to the economy.
But taxation as an instrument of fiscal policy, I the researcher decided to find out whether taxation is really used to achieve the following objectives of government.
To protect infant industries
To reduce inequalities of income distribution
To raise revenue to meet the cost of general administration and social services
To check inflation
To check the consumption of harmful goods.
1.7 SCOPE OF THE STUDY
The researcher work covered board of Internal Revenue Enugu, both the management and the staff of the board of Internal Revenue, Enugu. The period covered the researcher will be starting from 2001 to 2010 Nigeria fiscal year which may be of great important to the report.
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