One of the major functions of any government especially developing countries such as Nigeria is the provision of infrastructural services as electricity, pipe-born water, hospitals, schools, good roads and as well as ensure a rise in per capita income, poverty alleviation to mention but 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 the tax on all taxable individuals and companies to augment government financial position. To end this, government have always enacted various tax laws and reformed existing one to stand the taste of time. They include: Income Tax Management Act (ITMA) Companies Income Tax Decree (CITD), Joint Tax Board (JTB) 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.

STATEMENT OF THE PROBLEM

The first need of any modern government is to generate enough revenue which is indeed “the breath of its nostril”. Thus taxation is by far the most significant source of revenue for the government. Nigerian regard payment for tax as a means whereby government raises revenue or herself at the expense of their sweat.

It is good to note that no tax succeeds without the taxpayers co-operation. Here, we can ask some though provoking questions such as: what makes taxation such a difficult issue? Why do people feel cheat when it comes to tax? 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.

· Problems affecting the successful operation of tax system in Nigeria.

· How to determine the assessable income

· Process of tax administration in Nigeria.

OBJECTIVE OF THE STUDY

The general objective of the study is to assess the contribution of taxes towards the growth of an economy.

However, the specific objective of the study includes:

· To examine the relevance of taxation in Enugu State.

· To determine why people feel cheated when it comes to tax

· To determine the extent government has been using revenue generated from tax.

· To examine how tax rate affects the rate of investment in the economy.

· 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 enormous that it is exploitation by government for their selfish interest.

RESEARCH QUESTION

ØDoes taxation has impact in Enugu State?

ØAre people feeling cheated in taxation?

ØWhether tax rate affects the rate of investment in the economy?

ØWhether government are using revenue generated from tax effectively?

ØHas tax incentive measure increased desirability of firms to invest?

RESEARCH HYPOTHESES

Ho: Taxation does not have impact in Enugu state.

H₁: Taxation has impact in Enugu state.

Ho: People are not feeling cheated in taxation.

H₁: People are feeling cheated in taxation.

Ho: Government are not using revenue generated from tax effectively.

H₁: Government are using revenue generated from tax effectively.

Ho: To incentive measures have not increased desirability of firms to invest.

H₁: To incentive measures has increased desirability of firms to invest.

Ho: Tax rate does not affect the rate of investment in the economy.

H₁: Tax rate affect the rate of investment in the economy.

SCOPE (DELIMITATION) OF THE STUDY

The scope of this study covers critical examinations on the impact of taxation on Enugu State economic development. It will also analyze other related issues such as structure and administrative machinery of tax in Enugu State and their associated problems. The essence of this digression is to possibly find out the obstacles if any, that hinders the effective collection and administration of tax in the state.

SIGNIFICANCE OF THE STUDY

One of the most frequently discussed issue 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 endowned with the necessary human and material resources and which the people pay tax has been turned a heavily indebted country.

Taxation is a major source of revenue to the government revenue generated from tax enables government to perform its functions effectively.

Taxation acts as an instrument of fiscal policy. The study will in addition reveal if there are other better sources of government funding.

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 government which is responsible for the federal tax matters.

CITA: Company Income Tax Act of 1979: 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 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 petroleum profit tax and also specified how profit from petroleum will be taxed.

Witholding Tax: This is tax charged on investment income namely, rents, interest, royalties and dividends; presently it is charged as the tax off set.

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.

Personal Tax: It include all taxable persons whether individual or corporate bodies.