THE IMPACT OF TAXATION AS AN AID TO ECONOMIC DEVELOPMENT IN EDO STATE (A CASE STUDY OF OREDO LOCAL GOVERNMENT AREA, EDO STATE, NIGERIA)
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THE IMPACT OF TAXATION AS AN AID TO
ECONOMIC DEVELOPMENT IN EDO STATE
(A CASE STUDY OF OREDO LOCAL GOVERNMENT
AREA, EDO STATE, NIGERIA)
PROPOSAL
The research work
will discuss in detail the impact of taxation as an aid to Economic Development
in Edo State. It will also take cognizance of the aims and objectives of
taxation and its impact on the economic developments of Nigeria. It also
aimed at identifying problems that inhibit the efficient and effective
administration of the Nigeria tax’s system.
The chapter one of
this work is going to discuss in brief, the introduction, statement of the
problem, purpose of the study, significance of the study, scope of the study,
limitations of the study, assumptions of the study, formulation of hypothesis
and definition of terms.
In chapter two, the
researcher will deliberate on: Definition of Tax and types, incidence of
taxation, principles of taxation, element of taxation, importance of taxation,
structure and administration of Nigerian Tax system, appraisal of some tax
legislation and taxation functions and problems.
Chapter three will
consider design and methodology, selection of data: primary data, secondary
data, population, sampling technique, sample size and problems of data
collection.
Chapter four will deliberate
on the data presentation and analysis, interpretation of result and test of
hypothesis.
Conclusively, chapter
five will centre on the summary of the findings, conclusion from the study,
recommendation and suggestion for further research.
ABSTRACT
The purpose of this
study is to find out if actually there is an impact of taxation as aid to
economic development and my study is based on the survey of Edo State, using
Oredo 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.
The primary function
of every government is to make provision for its citizens in terms of
infrastructural facilities. The provision of this enormous work cannot be
carried out adequately by the government due to its limited resources
therefore, there is the imposition of tax on all citizens, companies to augment
government financial position. Government have always enacted various tax
laws and reformed to stand the taste of time.
TABLE 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 Significance of the study
1.5 Scope and Limitations of the
study
1.6 Assumptions of the study
1.7 Formulation of Hypothesis
1.8 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 Principles of Taxation
2.5 Element of Taxation
2.6 The Importance of Taxation
2.7 Appraisal of some tax
legislation
2.8 Structure of Administration
of Nigeria Tax System
2.9 The problems of taxation and
its function
CHAPTER THREE
3.0
Design and Methodology
3.1 Primary Sources of Data
3.1.1
Personal/Oral Interview
3.1.2
Questionnaire Method
3.2 Secondary Sources of Data
3.3 Population and Sample Size
Determination
3.4 Methods of Data Collection
3.5 Method of Validating the
instrument
3.6 Method of Data Analysis
3.7 Problems of data collection
CHAPTER FOUR
4.0
Presentation of Analysis of Data
4.1 Presentation of related data
4.2 Analysis of Data
4.3 Test of Hypothesis
4.4 Interpretation of Result
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 to mention a few.
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
Edo State (Nigeria).
1.2
STATEMENT OF THE PROBLEM:
The first need of any
modern government is to generate enough revenuewhich is indeed “the breath of
its nostril”. Thus taxation is by far the most significant source of
revenue for the government. Nigerians regard payment of tax as a means
whereby government raises revenue on herself at the expense of their sweat.
It is good to note
that no tax succeeds without the taxpayer’s co-operation. Here, we can
ask some thought-provoking questions such as: what makes taxation such a
difficult issue? Why do people feel cheated when it comes to tax?
Is government making judicious use of taxpayer’s money? In view of these
questions above, this study is going to be carried out to offer solution to
them.
We shall also look at
the following issues and offer recommendations.
1. Problems affecting
the successful operation of tax system in Nigeria.
2. How to determine
the Assessable income.
3. Process of tax
administration in Nigeria.
1.3 OBJECTIVE OF THE STUDY:
The general objective
of the study is to assess the contribution of taxes towards the growth of the
Edo State Economy.
However, the specific
objective of the study includes:
1. To examine the
relevance of taxation in Edo State.
2. To determine why
people feel cheated when it comes to tax.
3.
To determine the extent government has been using revenue generated from tax.
4.
To examine how tax rate affects the rate of investment in the economy.
5.
To know general desirability of firms to invest as a result of tax incentive
measures.
Generally, the work
is done to find out if tax constitutes the bulk of government revenue and to
erase the erroneous that it is an exploitation by government for their selfish
interest.
1.4 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 Edo 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 impact of tax on small business in the state.
5.
The study will in addition reveal if there are other better sources of
government funding.
1.5.1
SCOPE OF THE STUDY:
The scope of this
study covers critical examinations on the impact of taxation on Edo State
economic development. It will also analyse other related issues such as
structure and administrative machinery of tax in Edo State and their associated
problems. The essence of this digression is to possibly find out the
obstacles if any, that hinder the effective collection and administration of
tax in the State.
1.5
ASSUMPTIONS OF THE STUDY:
The researcher in
carrying out this study will make the following assumptions:
1.
That the data that will be used are true and fair figures of taxes actually
collected by the Federal Government in each year of assessment.
2.
That the data will be authentic and can be relied on for further research work
on the topic.
3.
That the data is going to form the basis of the research work.
1.7
FORMULATION OF HYPOTHESIS:
To enable the
researcher test if there exist any correlation between revenue generated from
tax and its impact on the Edo State economy, some statistical model will
be used based on the response from the oral interview carried out and the
questionnaire distributed, the data gathered from here will be used to test the
following hypothetical statement (assumption).
HYPOTHESIS I:
The Null Hypothesis
(Ho): Revenue generated from tax does not make any impact on the economic
development of Edo State
The Alternative
Hypothesis (HA): Revenue generated from tax has a positive impact on the
economic development of Edo State.
HYPOTHESIS II:
The Null Hypothesis
(HO): That tax evasion and avoidance do not affect tax revenue.
The Alternative
Hypothesis (HA): that tax evasion and avoidance do affect tax revenue.
HYPOTHESIS III:
The Null Hypothesis
(HO): That revenue generated from tax is so merger compared to revenue
from other sources as such, government can do with tax.
The Alternative
Hypothesis (HA): That tax is a major source of government revenue and as
such government cannot do without tax.
1.8 DEFINITION OF TERMS:
TAX:
A compulsory levy by the government on its citizen for the provision of public
goods and services.
TAX
BASE: The object which is taxed for instance personal income, company
profit.
TAX
RATE: The rate at which tax is charged.
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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