THE EFFECT OF TAXATION AS AN AID TO ECONOMIC DEVELOPMENT (A CASE STUDY OF OJI RIVER LOCAL GOVERNMENT, NIGERIA)
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THE EFFECT OF
TAXATION AS AN AID TO ECONOMIC DEVELOPMENT
(A CASE STUDY OF OJI
RIVER LOCAL GOVERNMENT, NIGERIA)
ABSTRACT
The purpose of this research work is to
study the effect of taxation as an aid to economic development and my study is
based on the survey of Enugu State, using Oji River as a case study. This
research also became necessary in order to bring to the proper understanding of
the enquirer the best ways to solve such problems connected with the taxation
especially: what is taxable, which system of tax is acceptable, the rate of tax
evasion and avoidance and the assessment of Nigeria tax system. In the course of
this study various literature were reviewed to provide a theoretical framework
to the study while field survey was carried out to get the applicability of the
study. The data for the research work came from both primary and secondary
source. The primary data include the use of oral interview and
distribution of designed questionnaires to management and staff of
manufacturing firms. The data collected were tested and analyzed using
the major findings by the researcher which includes that of observation of the
issue of taxation which involves many responses in the country. People
feel reluctant to pay taxes, some try to avoid it, while other will not like to
see the tax collectors not to talk of paying taxes. The following
suggestions and recommendation were made which the researcher believes will
increase tax revenue as well as eliminate administrative problems. The
tax officials need improvement through adequate training and provision of
suitable working materials and facilities.
TABE OF CONTENTS
CHAPTER ONE
1.0
Introduction
1.1 Background of the
study
1.2 Statement of the
problem
1.3 Objectives of the
study
1.4 Research Questions
1.5 Significance of the
Study
1.7 Definition of
Terms
CHAPTER
TWO
2.0
Review of Related
Literature
2.1
Introduction
2.2 Definition of Tax and
Types
2.3 Incidence of
Taxation
2.4 Principle of Taxation
2.5 Structure of Administration
of Nigeria
2.6 Structure and Composition of
the Board
2.7 Problems of Taxation
2.7 Function of
Taxation
CHAPTER THREE
3.0
Design and Methodology
3.1 Research Design
3.2 Area of the
Study
3.3 Population of the
Study
3.4 Sampling Method
3.5 Research Instrumentation
3.6 Validity and Reliability of
Research Instruments
3.7 Methods of Investigation
CHAPTER FOUR
4.0
Presentation of Analysis of Data
4.1 Presentation of Related
Data
4.2 Analysis of
Data
CHAPTER FIVE
5.0
Summary of Findings
5.1
Conclusions
5.2
Recommendations
Bibliography
Questionnaire
CHAPTER ONE
1.0
INTRODUCTION:
1.1 BACKGROUND OF THE STUDY:
One of the major
functions of any government especially developing countries such as Nigeria is
the provision of infrastructural services such as electricity, pipe-borne
water, hospitals, schools, good roads and as well as ensure a rise in per
capita income, poverty alleviation etc.
For these services to
be adequately provided, government should have enough revenue to finance them.
The task of financing these enormous responsibilities is one of the major
problems facing the government. Based on the limited resources of government,
there is need to carry the citizens (governed) along hence the imposition of
tax on all taxable individuals and companies to augment government financial
position. To this end, government have always enacted various tax laws
and reformed existing ones to stand the taste of time. They
include: Income Tax Management Act (ITMA), Companies Income Tax Decree
(CIID), Joint Tax Board (JIB) etc.
All these are aimed
at ensuring adherence to tax payment and discouraging tax evasion and
avoidance. For the purpose of this study, the researcher would be
concerned with the impact of taxation as an aid to the economic development of
Enugu State (Nigeria).
1.2
STATEMENT OF THE PROBLEM:
This research work “The effect of
taxation as an aid to economic development has problems which the researcher
has seen and wish to make an input below are some of the problems.
Inadequate
administration of taxation by Oji River Local Government of Enugu State has
adversely affected growth and development of the local government.
Tax evasion by divers firms in the local government has also incapacitated the
local government from effectively carrying out its development projects in the
area.
Ineffective
implementation of tax policies by the local government contributes to
ineffective taxation administration which invariably affects the development of
the local government.
Corruption which has eaten into virtually all sectors of Nigeria economy has
also affected effective tax administration in the local government.
1.3 OBJECTIVE
OF THE STUDY:
The specific
objectives of this study includes the following
1. To examine
the extent to which inadequate administration of taxation by oji River local
government of Enugu State affect its growth and development.
2. To examine
whether there are firms in Oji River local government that evade tax.
3. To examine
the relationship between tax evasion and economy development.
4. To examine
the effect of ineffective implementation of tax policies on its administration.
5. To examine
the effect of corruption on tax administration in Oji River local government
areas.
1.4 RESEARCH
QUESTIONS
The following research questions are
formulated for the purpose of this research study.
1. To what
extent does inadequate administration of taxation by Oji River local government
of Enugu State affects its growth and development?
2. Are there
firms in Oji River local government that evade tax?
3. Is there a
relationship between tax evasion and economic development?
4. Does
ineffective implementation of tax policies affects its administration?
5. Does
corruption affect tax administration in Oji River local government area ?
1.6
SIGNIFICANCE OF THE STUDY:
One of the most
frequently discussed issues in Nigeria is how to solve the economic hardship in
the country and how to create an industrial base that can be guarantee self
sustaining economic development. Also one wonders why a country which is
richly endowed with the necessary human and material resources and which the
people pay tax has been turned a heavily indebted country.
The study will afford
us the opportunity to know the roles taxation play in the Enugu State economy
such roles includes:
1.
Taxation is a major source of revenue to the government.
2.
Revenue generated from tax enables government performs its functions
effectively.
3.
Taxation acts as an instrument of fiscal policy.
4.
The effect of tax on small business in the state.
5.
The study will in addition reveal if there are other better sources of
government funding.
1.9 DEFINITION
OF TERMS:
Tax:
A compulsory levy by the government on its citizen for the provision of public
goods and services.
Tax
Rate:
The rate at which tax is charged.
Tax
Base:
The object which is taxed for instance personal income, company profit.
Tax
Incidence: It offers to the effect of and where
the burden is finally rested.
FBIRS:
Federal Board of Inland Revenue Services. It is an operational arm of
Federal Board of Inland Revenue which is responsible for the Federal Tax
matters.
CITA:
Company Income Tax Act (CITA) is a federal law operated by the FIRS, which
deals with the taxation of all limited liability companies in Nigeria with the
exception of those engaged in petroleum operations.
JTB:
Joint Tax Board (JTB) is established under Section 85(1) of Decree 104 of 1993
to arbitrate on tax disputes between one state tax authority and another.
VAT:
Value Added Tax is a multistage tax levied and collected on transactions at all
stages of sales and distribution.
CGTA:
Capital Gain Tax Act is an act that stipulates that all capital gains arising
on disposal of asset of individual partnership and limited companies should be
taxed.
PPTA:
Petroleum Profit Tax Act is an act that regulates the petroleum profit tax and
also specifies how profit from petroleum will be taxed.
Withholding
Tax:
This is tax charged on investment income namely: rents, interest, royalties and
dividends, presently it is charged as the tax offset.
Progressive
Tax:
This is a tax incidence that increases as the size of income increases.
Regressive
Tax:
A tax is regressive when its tax rate decreases as the income increases.
Excise
Duties: These are
taxes on some goods manufactured within a country.
Persons:
It includes all taxable persons whether it be individual or corporate bodies.
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