THE IMPACT OF FEDERAL GOVERNMENT TAX POLICIES ON NIGERIAN ECONOMY 1995-2003.

RESEARCH PROJECT PRESENTED TO DEPARTMENT OF BANKING AND FINANCE IMT, ENUGU.  

IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF HIGHER NATIONAL DIPLOMA (HND). BANKING AND FINANCE

                                            ABSTRACT

The purpose of writing this research works.  The impact of federal government tax policies on the Nigerian Economy, is determine whether the federal government tax policies in Nigeria has contributed immensely to the overall growth of the economy.  It also seeks to investigation on the extent the polices of federal government tax has helped in revenue generation and allocation.

     The literature review gave a background and in depth in the country and also the various policies banking them.

The decision made on this work was derived based on the test conducted. The chi-square was used in testing the hypothesis while frequency tables and percentage were used in analyzing the data.     The decisions were that  the federal government  tax policies is actually a regulatory frame work of revenue generation in Nigeria. While the other one is that the federal government tax policies has contributed to the growth of the economy.

   Based on the above decision, some findings were made which necessitated recommendations and finally conclusions.

TABLE OF CONTENT                                                          PAGE

TITLE PAGE                                                                               i

DEDECATION                                                                            ii

APPROVAL                                                                                 iii

ACKNOWLEDGEMENT                                                            iv

ABSTRACT                                                                                 vi

TABLE OF CONTENT                                                                vii

CHAPTER ONE

INTRODUCTION

1.1           STATEMENT OF PROBLEM AND OBJECTIVES……………

1.2           RATIONAL OF STUDY………………………………………..

1.3           SIGNIFICANCE OF THE STUDY……………………………..

1.4           BACKGROUND OF THE STUDY …………………………….

1.5           DEFINITION OF TERMS ………………………………………

CHAPTER TWO

LITERATURE REVIEW

2.1           THEORITICAL REVIEW

2.2           EMPRICAL REVIEW

CHAPTER THREE

HYPOTHESIS, METHODOLOGY, SOURCES OF DATA LIMITATION OF THE STUDY.

3.1            HYPOTHESIS OF THE STUDY

3.2            METHODOLOGY OF STUDY

3.3            SOURCES OF DATA

3.4            LIMITATION OF STUDY

CHAPTER FOUR

DATA PROSENTATION, ANALYSIS AND DISCUSSION OF RESULT.

4.1            DATA PRESENTATION

4.2            ANANLYSIS OF DATA

4.3            DISCISSION OF THE RESULT

CHAPTER FIVE

5.1           SUMMARY OF THE ENTIRE WORK

5.2           CONCLUSION

5.3           RECOMMENDATION

5.4           SUGGESTION FOR FURTHER RESEARCH

            BIBLIOGRAPHY

            APPENDIX.

CHAPTER ONE

INTRODUCTION

1.1            PROBLEM IDENTIFICATION AND PURPOSE OF THE STUDY

   The burden of tax falls heaviest on those with smallest income earning (odoh, 1998). An accurate record of business transaction and income tax becomes difficult. Some tax collection and assessors are dishonest.

There are cases of bribery and corruptions and also the cases of tax collections being prosecuted for misappropriations of funds collected from taxpayers.

  Sometimes tax collectors went into the remote villages to collect tax but the problem of transportation might increase the difficultly. Also there is a languge barrier in the tax collection to raise money. Taxes are imposed to raise revenue for government for it to satisfy the peoples wants.

   There is need for government to raise money for the provision of essential services such as the maintenance of law and order, the construction of roads and railways and the provision of health services, social and educational facilities. It is important because it is used to stimulate recovery from trade depression when unemployment is usually high, so to fight these ills there may be an increase in taxation.

PURPOSE OF THE STUDY

The Nigerian government has realized the need for revenue generation through imposition of tax on citizen so there are different objective for imposing tax in the country.

   To detect the extent, the federal government tax policies have helped in revenue generation and allocation in Nigeria.

   To find out the extent the federal government tax polices have contributed to the growth of the economy.

2.1            RATIONALE OF STUDY

The federal government generates a large proportion of its revenue from tax.  The revenue generated from tax helped the federal government to provide for such things as national defence, security, Justice, transport, Communication and construction, health and education, while transfers from the fourth group and include employed retirement benefit consisting of pension, gratuities and public debt charges.

Tax controls inflation in an economy because when there is inflation in the economy, government can tax away the income in the hand of society and thereby reducing the aggregate demand, which will eventually bring the price down in the economy.

Government also levy taxes to discourage the consumptions of goods that are considered undesirable, goods welfare or those goods that create room for ostentation, wrong investment priorities or class distinction in he society (odoh 1998)

1.2            SIGNIFICANT OF THE STUDY

The finding of this research will benefit both the government and community.  The government generates a large population of its revenue from tax and it s used to satisfy people wants and it is providing for such things are national defence, security, Justice, Construction of roads and railways and provision of essential services, health social and educational facilities.

   Hence it is beneficent to both because taxes are imposed to raise revenue for the government for it to satisfy the people in a community.  Also it is used to stimulated recovery from trade depression, when unemployment is usually high.

1.3            BACKGROUND INFORMATION ABOUT THE STUDY:

In Nigeria, many units of government, which in geopolitical jargon can be called junsdiction, carry out the fiscal operations.

     Some fiscal functions are operated on a more centralized level which others are decentralized. Each of the three major fiscal functions are Allocation, distribution and stabilization, has economic reasons to be operated by each level of government. Taxation is the most important source of public revenue.

Tax is a levy, which a government imposes on the income of a citizen of a state for which the government makes no direct benefits to the payer.  It is a compulsory contribution imposed by government on private persona, groups and institution within the country. Since it is a company payment a person who refuses to pay a tax is liable to punishment.  But it is paid only by those who come under funsdiction. (Odoh, 1998).

   The federal government generated a large proportion of its revenue from tax it is a compulsory contribution from corporate and natural person to government to defency the expenses incurred in the common interest of all with reference of special benefit conferred.  It is non-panel yet compulsory transfers of resources from the private on the prime sector, which must be levied on the basis or well-established criteria of equity, certainty, convenience.

Apart from using tax to generate revenue to finance her project, the federal government uses taxation for the purpose of influencing activities in the economy, thereby achieving its growth and stabilization policies. (odoh, 1998)

DEFINITION OF TERMS

     Tax: Tax is a levy, which a government imposes on the income, or production and consumption of goods of the citizen of a state for which the government makes no direct benefit tax payer

INFLATION:  This is a general increase in price by the final consumer of goods and services because it is included in the price paid

VAT:   It is a tax on spending which is borne by the final consumer of goods and services because it is included in the price paid.

FISCAL POLICY:  Fiscal policy is the way or measure in which the federal government controls the circulation of money in the economy.

REVENUE – Revenue is the income or receipt of money by government. It could be said to be find or finance gotten by the government.

TAX BASE:  Tax base is the items on which the government levies the tax on.

TAX AVOIDANCE:  Is a way in which taxpayer illegally reduces, delay or avoid paying tax.  This is subject to punishment by the law court

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