ABSTRACT
This research is proposed to investigate taxation as a fiscal policy tool – on its use in solving economic problem such as inflation reduction, harmonization of policies on tax as it relates to government policies and conflict in objectives, inequality, multiple tax problem etc.
This work is a critical look at the existing forms of taxes in the county. It also looked at the Nigeria tax system in terms of tax policy; tax laws and finally taxes administration. It talked about principles / characteristics of a good tax system and of course, the role of taxation in the Nation’s development.
Questionnaires were administered on the relevant population sample. Also they were interviewed and data collected, analyzed and interpreted. Chi – square was used in analyzing the data collected. The collected data were tabulated according to their relevance to the hypothesis.
It was discovered that some level of stability has been achieved by way of reduction in inflation.
Also, the production sits for have received considerable amount of encouragement through various incentives given in order to encourage production activity. It was also discovered that provision of tax system on resource allocation, increase in disposable income, has not been sufficient.
In all, it was concluded that the Nigeria tax system is fairly adequate.
PREFACE
This research work is an attempt to examine how taxation is used as a fiscal policy tool in planning, controlling and co-ordinating the tempo of some of the activities of the economy. It has been made for all those who may be interested in carrying out a study on issues like re-distribution of income; inflation control; resource re-allocation and protection of infant industries.
This work will also be useful to all and sundry, particularly the policy makers in the country who are aware of the state of the nations economy and being hoped of this work. The structure of this work is fairly simple. There are five chapters altogether.
Chapter one gives all analysis of the project paper. Chapter two deals with the review of related literature. Chapter three deals with the design of the research and methodology. Chapter four, data collection, presentation and analysis finally chapter five explores the findings, recommendations, conclusion and suggestion for further studies.
REVIEW OF RELATED LITERATURE
2.1 Definition / forms of taxes
2.2 The tax system
2.3 Principles / characteristics of a good tax system
2.4 Development of Nigeria tax system
2.5 The role of taxation in the Nation’s development
2.6 References
RESEARCH DESIGN AND METHODOLOGY
3.1 Study area
3.2 Sources of data (Primary and Secondary Sources)
3.3 Method of investigation
DATA PRESENTATION AND ANALYSIS
4.1 Data presentation
4.2 Analysis
4.3 Testing of hypothesis
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
5.1 Summary of findings
5.2 Conclusion
5.3 Recommendation
Bibliography
Appendix
The economy of any county regardless of its structure is normally regulated by certain policies developed by the government of such a country. Among these policies there are economic policies, social policies etc.
However, the economic policies are more fundamental in that it serves as a foundation for the success of other policies of the government. The constituent elements of these economic policies need to be manipulated, and most of them simultaneously for the desired result. One of the essential arms of economic policies, the fiscal policy, is related to government tax and expenditure. In another way around form, Baumel, W.J. and Blinder A.S., (1979) in the book “Economic principles and policy” defines fiscal policy as governments plan for spending and taxation. It serves as a means of planning, controlling and co-ordinating the tempo of activities in the economy.
Taxation is one of the courses of action of fiscal policy. According to Olanifan I.F. (1994) it is the compulsory transfer of resources from the private sector to the public of the economy of the nation. The direction of taxes is seen in its potential effects on the determinants of growth. This is done by way of;
This important aspect of the fiscal policy has been a major sources of revenue generation in Nigeria roughly this around the turn of this century. Apart from serving this important purpose, it has also been a major policy instrument that the government has consistently used in planning, controlling and co-ordinating the various economic activities of the country gear towards economic growth.
The tax system being a principal fiscal tool, when effectively executed, is capable of helping the nation out of the state of economic recession which is the main problem of distributing the standard of living of individuals in the country.
Therefore, it is the main objective of this study to take critical examination and evaluation of the tax system as all instruments of fiscal policy. And after the analysis, the researcher is deemed to suggest welling planning solution as to the pervading problems of this tax system.
The aim of this research work is to examine how the use of taxation as a fiscal instrument in Nigeria has affected the nation’s socio-economic life. These objectives are as follows:
The awareness of the role of taxation as an instrument of fiscal policy in the development of this economy and its effect on the economy is essential for all the economic units. Individuals, business organizations etc. the degree of industrialization indirectly show the stage an economy is in. for example, for production to be worthwhile, the government has to set up a tax structure that is conducive for potential; investors. Company tax, custom and excise duties, import duties, on raw materials and equipment’s that can be source locally, from the sets of fundamental issue that need to be addressed to make investment, attractive example high company tax and excise make production unattractive.
The course of this study will also go a long way in addressing the issue of economic stability by way of estimating the level of national income that can be reached without generating inflation or excessive balance of payments, deficits by selling the desired allocation of national income among the uses of consumption investment. Finally, setting the level of composition of taxes so that aggregate demand does not exceed the productive capacity of the economy or aggregate supply.
Other areas of importance are related in ways in which it helps in redistribution of income in order to check inequality: how it protects infant industries in the country against older and well established foreign industries: also in the simulation of economic recovery.
Taxation from time immemorial has been a useful fiscal instrument in effecting revenue generation and other important economic variables example maintenance of price stability, income distribution, economic growth etc. in the nation. Nevertheless, there are various problems associated with the nation’s tax system. Most of those problems are enunciated below;
There are some of the existing problems of achieving stability by way of estimating national income level that can be reached without generating inflation at the same time. Government has consistently reduced tax rate on individual in order to increase their disposable income. In achieving this, the possibility of also bringing about inflation as a result of more money being released into the economy cannot be ruled out.
Also, another aspect is that of harmonization of policies on taxation problem which relates to government policies and conflicts in objectives. Assuming government wants more revenue by way of increasing import duties while at the same time, this increase in import duties that has other objectives like protection of infant industries and conserving foreign exchange. Each of these objectives will increase propensity to smuggle.
Furthermore, the multi-tax system problem also exists in the Nigeria tax system. This is a situation whereby a particular tax being levied at the federal level is also levied at the state or local government level. An example of this is the education tax been collected from companies.
It should be noted that while the tax system remains inefficient, the question on inequality continues to reign and those endowed and blessed with more factors of production (resources) becomes richer while those with little or no resource become poorer and poorer, hence the unabridged gap widens. Other problems could be those of tax evasion and avoidance; mismanagement of tax revenues, lack of skilled adequate manpower etc. the problem above necessitate the need for the researcher to embark on this research work in order to finding solution to them. It is hoped that adequate solutions would emerge by the end of this research work.
The researcher formulated the following hypothesis.
Ho: The shifting of tax burden from production to consumption since the introduction of VAT has not been able to reduce inflation.
H1: the shifting of tax burden from production to consumption since the introduction of VAT has been able to reduce inflation.
Hypothesis 2
Ho: Savings of individuals has not increased for investment purposes inspite of tax rate reduction and tax relief given over the years.
H1: Savings of individuals has increased from investment purposes inspite of tax rate reduction and tax relief given over the years.
Hypothesis 3
Ho: The imposition of high import duties / tariffs has not protected infant industries from competition by foreign counterparts.
H1: The imposition of high import duties / tariffs has protected infant industries from competition by foreign counterparts.
Hypothesis 4
Ho: Tax levied on harmful products such as tobacco and alcohol has not reduced their production and consumption.
H1: Tax levied on harmful products such as tobacco and alcohol has not reduced their production and consumption.
The scope of this research work is expected to cover the periods starting from the year 1991 to 2000 Nigeria fiscal years. These periods were chosen in order to be able to make adequate comparison between them as to how taxation has affected the current trend of changes / developments in the economy of the nation.
LIMITATION
In the course of the study, a lot of problems were encountered which consequently led to the confinement of the research result to the final outcome.
| 1 - 5 of 96 Reviews |