THE IMPACT OF TAXATION ON ECONOMIC DEVELOPMENT OF ONDO STATE
ABSTRACT
The main purpose of this study is to
investigate the impact of taxation on economic development of Ondo State:
A case study of Ministry of Finance and Economic Planning, Akure. The research methodology used for the
collection of the data include an extraction of data on revenue generated from
taxation in the Ministry of Finance and Economic Planning and also, through the
use of questionnaires. From the Findings,
it was found that taxation has both positive and negative impact on the economy
depending on the prevailing condition.
Also, taxation is the major source of government revenue. Through the revenue generated from taxation,
government was able to carry out her expenditure functions for the benefit of
its citizens and growth of the Economy.
investigate the impact of taxation on economic development of Ondo State:
A case study of Ministry of Finance and Economic Planning, Akure. The research methodology used for the
collection of the data include an extraction of data on revenue generated from
taxation in the Ministry of Finance and Economic Planning and also, through the
use of questionnaires. From the Findings,
it was found that taxation has both positive and negative impact on the economy
depending on the prevailing condition.
Also, taxation is the major source of government revenue. Through the revenue generated from taxation,
government was able to carry out her expenditure functions for the benefit of
its citizens and growth of the Economy.
The following recommendations were
made based on the findings of this research work:
made based on the findings of this research work:
·
Government
should educate the public on the importance of taxation and its benefit to the
people.
Government
should educate the public on the importance of taxation and its benefit to the
people.
·
Government
should ensure that the money collected is used for the provision of service and
social amenities to the paying community.
This will encourage them to pay their taxes as at when due.
Government
should ensure that the money collected is used for the provision of service and
social amenities to the paying community.
This will encourage them to pay their taxes as at when due.
·
Government
should also give incentive to business organization in form of tax holiday.
Government
should also give incentive to business organization in form of tax holiday.
TABLE OF CONTENTS
Title page
Certification
Dedication
Acknowledgement
Abstract
Table of contents
CHAPTER ONE
1.0
INTRODUCTION
INTRODUCTION
1.1
Background
of the study
Background
of the study
1.2
Statement
of the Problem
Statement
of the Problem
1.3
Objectives
of the study
Objectives
of the study
1.4
Research
Questions
Research
Questions
1.5
Significance
of the study
Significance
of the study
1.6
Scope
of the study
Scope
of the study
1.7
Definition of Terms
Definition of Terms
CHAPTER TWO
2.0
LITERATURE
REVIEW
LITERATURE
REVIEW
2.1
Definition
of Taxation
Definition
of Taxation
2.2
Classification
of Taxes
Classification
of Taxes
2.3
Systems
of Direct taxes
Systems
of Direct taxes
2.4
The
principles of a good tax system
The
principles of a good tax system
2.5
The
incidence of taxation
The
incidence of taxation
2.6
Advantages
and Disadvantages of direct
Advantages
and Disadvantages of direct
2.7
Advantage
of Indirect taxes
Advantage
of Indirect taxes
2.8
Disadvantages
of indirect taxes
Disadvantages
of indirect taxes
2.9
Problem
of tax collection in West African Countries
Problem
of tax collection in West African Countries
2.10 Impact of taxes
2.11 Tax Policy Objective and its benefits
on the
on the
economic development
CHAPTER THREE
3.0
METHODOLOGY
METHODOLOGY
3.1
Research
Design
Research
Design
3.2
Population
of the study
Population
of the study
3.3
Sample
and sampling technique
Sample
and sampling technique
3.4
Research
Instrument
Research
Instrument
3.5
Administration
of the Instrument
Administration
of the Instrument
3.6
Data
Analysis
Data
Analysis
CHAPTER FOUR
4.0
Results
and Discussions
Results
and Discussions
CHAPTER FIVE
5.1
Summary
Summary
5.2
Conclusion
Conclusion
5.3
Recommendation
Recommendation
BIBLIOGRAPHY
QUESTIONNAIRE
CHAPTER ONE
1.0
Introduction
Introduction
1.1
Background to the study
Background to the study
Taxes are levied on almost every
country of the world, primarily to raise revenue for government
expenditures. Although they serve other
purposes as well. Government expenditure
may be classified into two groups based services provided. There are recurrent expenditure and capital
expenditure capital expenses can be defined as expenses on goods whose services
are rendered over a long period of time.
They include expenses on roads, publications, utilities etc these
projects provide service for many years and are usually paid over a long period
of time. Recurrent expenses are usually
met form two main sources, taxation and miscellaneous Receipts. Taxation includes custom duties, excise
duties, purchase tax, income tax, corporation duties, profit tax etc while
miscellaneous receipt proceeds from licenses, fines and trading activities of
the government, capital expenses are financed mainly from borrowing, budget
surpluses and from grant and aid in modern economy, taxes are the most
important source of government revenue.
Taxes differ from other sources of government revenue simply because
they are compulsory levies and are unrequited, that is they are not paid in
exchange for some specific things such as the sale of public debt. While taxes are presumably collected for the
welfare of tax payers as a whole, the liability of the individual tax payers is
independent of any benefit received.
There are important exceptions to this characteristics, pay roll taxes
are commonly levied on labour income in order to finance retirement benefits,
medical payments and other social security programmes.
country of the world, primarily to raise revenue for government
expenditures. Although they serve other
purposes as well. Government expenditure
may be classified into two groups based services provided. There are recurrent expenditure and capital
expenditure capital expenses can be defined as expenses on goods whose services
are rendered over a long period of time.
They include expenses on roads, publications, utilities etc these
projects provide service for many years and are usually paid over a long period
of time. Recurrent expenses are usually
met form two main sources, taxation and miscellaneous Receipts. Taxation includes custom duties, excise
duties, purchase tax, income tax, corporation duties, profit tax etc while
miscellaneous receipt proceeds from licenses, fines and trading activities of
the government, capital expenses are financed mainly from borrowing, budget
surpluses and from grant and aid in modern economy, taxes are the most
important source of government revenue.
Taxes differ from other sources of government revenue simply because
they are compulsory levies and are unrequited, that is they are not paid in
exchange for some specific things such as the sale of public debt. While taxes are presumably collected for the
welfare of tax payers as a whole, the liability of the individual tax payers is
independent of any benefit received.
There are important exceptions to this characteristics, pay roll taxes
are commonly levied on labour income in order to finance retirement benefits,
medical payments and other social security programmes.
Taxation can be define as the money
imposed or levied by the government on her citizens in order to generate funds
so as to meet the expenditure or to distribute income. Taxes are levied so as to accomplish some of
the nations Economic and Social objectives.
Taxes have been a major subject of political controversy throughout history
even though they constitute a sizable share of national income. Introduction of taxation in Nigeria was
dictated by the financial needs of the colonial administration. Custom duties; as against direct taxes were
first introduced in the south. The northern territory was a
convenient place to experiment the system of direct. Taxation because the people of the area were
used to payment of tax under the Fulani’s administration and also because the
Muslim religion adhered to by the people approved taxation as being consistent
with the tenets of Islam. Direct tax was
introduced in the north in 1904. Two years after, the amalgamation of the north
and south in 1914 led to direct taxation being introduced in the western
territory in 1916. The Yoruba and Benin who were predominant in the
area already had well established tax system of administration before the
advent of British administration. In the
middle ages, many of these ancient taxes especial among the direct levies
vanished and gave way to a varieties of obligatory services and system of aids
most of which amounted to gifts. The
main indirect taxes transit entries and market fees. Taxes today are collected in money of in
goods. Government imposed taxes to raise
enough revenue only to cover the cost of administration and defence. As time went on, it was realized that defence
expenditure could not be adequately provided by the state, individuals, kings
and emperors. The state must provide
security and must prohibit those activities either by individual or group
within the society. To provide for these
services. Government began to raise
money inform of taxes. Hence, taxes
could be regarded as payment for services rendered by the government. Most countries expended on social services
particularly education, heath services, pension scheme and housing. As new development projects were created the
government needed increase its recurrent expenditure.
imposed or levied by the government on her citizens in order to generate funds
so as to meet the expenditure or to distribute income. Taxes are levied so as to accomplish some of
the nations Economic and Social objectives.
Taxes have been a major subject of political controversy throughout history
even though they constitute a sizable share of national income. Introduction of taxation in Nigeria was
dictated by the financial needs of the colonial administration. Custom duties; as against direct taxes were
first introduced in the south. The northern territory was a
convenient place to experiment the system of direct. Taxation because the people of the area were
used to payment of tax under the Fulani’s administration and also because the
Muslim religion adhered to by the people approved taxation as being consistent
with the tenets of Islam. Direct tax was
introduced in the north in 1904. Two years after, the amalgamation of the north
and south in 1914 led to direct taxation being introduced in the western
territory in 1916. The Yoruba and Benin who were predominant in the
area already had well established tax system of administration before the
advent of British administration. In the
middle ages, many of these ancient taxes especial among the direct levies
vanished and gave way to a varieties of obligatory services and system of aids
most of which amounted to gifts. The
main indirect taxes transit entries and market fees. Taxes today are collected in money of in
goods. Government imposed taxes to raise
enough revenue only to cover the cost of administration and defence. As time went on, it was realized that defence
expenditure could not be adequately provided by the state, individuals, kings
and emperors. The state must provide
security and must prohibit those activities either by individual or group
within the society. To provide for these
services. Government began to raise
money inform of taxes. Hence, taxes
could be regarded as payment for services rendered by the government. Most countries expended on social services
particularly education, heath services, pension scheme and housing. As new development projects were created the
government needed increase its recurrent expenditure.
1.2
Statement of the Problems
Statement of the Problems
It has been observed that wrong
declaration of income is very rampant among self – employed citizen. Also there is general ignorance of important
of tax and therefore the essence of tax payment is not clear to must of the
workers in Ondo State.
declaration of income is very rampant among self – employed citizen. Also there is general ignorance of important
of tax and therefore the essence of tax payment is not clear to must of the
workers in Ondo State.
1.3
Objectives of the study
Objectives of the study
This project is aimed at studying the
impact of Taxation on Economic Development of Ondo State. (A case study of
ministry of finance and economic planning).
impact of Taxation on Economic Development of Ondo State. (A case study of
ministry of finance and economic planning).
The specific objectives of the study
are:
are:
1)
To
identify the various types of taxes
To
identify the various types of taxes
2)
To
analyze the revenue generated by government from taxation in Ondo State.
To
analyze the revenue generated by government from taxation in Ondo State.
3)
To
evaluate the impact of taxes on the economic develioment of Ondo State.
To
evaluate the impact of taxes on the economic develioment of Ondo State.
4)
To
offer suggestion for overcoming some of the problems attributed to collection
of taxes.
To
offer suggestion for overcoming some of the problems attributed to collection
of taxes.
5)
To
highlight the benefits that will be derived from revenue generated through
taxation.
To
highlight the benefits that will be derived from revenue generated through
taxation.
1.4
Research Questions
Research Questions
a)
Do
the proceeds realized from taxes help in the economic development of Ondo State?
Do
the proceeds realized from taxes help in the economic development of Ondo State?
b)
Does
taxation bridge the gap between the rich and the poor?
Does
taxation bridge the gap between the rich and the poor?
c)
Does
taxation have any impact on the economy of the payers in Ondo State?
Does
taxation have any impact on the economy of the payers in Ondo State?
d)
Does
the government generate its income mainly through taxation?
Does
the government generate its income mainly through taxation?
1.5
Significance of the study
Significance of the study
The findings and recommendations of
this study will be of immense assistance to the government and tax collectors
in Ondo State.
this study will be of immense assistance to the government and tax collectors
in Ondo State.
1.6
Scope of the study
Scope of the study
The research is carried out to find
out the impact of taxation on Economic development of Ondo State. Total amount of the money collected from
various will be calculated and presented in the table. Descriptive statistical analysis will be use.
out the impact of taxation on Economic development of Ondo State. Total amount of the money collected from
various will be calculated and presented in the table. Descriptive statistical analysis will be use.
1.7
Definition of Terms
Definition of Terms
Tax: A tax is a compulsory levy
imposed by the government on individual and business firm and paid by them to
the government. INCOME TAX: This is the
tax on the income of individual after all allowances have been deducated. COMPANY TAX: This is the on the property of a
company. PROPERTY TAX: This is the tax
on the property value of an asset. POLL
TAX: A poll tax is a flat rate levied on every individual in a country. DIRECT TAX: A direct tax is a tax levied
directly on the income of individual and business firm. INDIRECT TAX: These are taxes levied on goods
and services. CUSTOM DUTIES: These are
taxes levied on goods brought into the country.
EXPORT DUTIES: These are taxes levied on good brought into the
country. PURCHASE TAX: This is an
advolarem tax. (i.e. based on the value of commodities generally collected at
the whole sale stage. SALE TAX: It is a tax levied and collected
either at a whole sale or retail level.
LICENSE: The use of radio and television set and the sale of drinks
attract taxes in the from of license which have to be obtained. DEATH DUTIES: Taxes on the properties of the
deceased. PROGRESSIVE TAX SYSTEM: A tax is said to be progressive if the rate
increases as the size of income increases.
REGRESSIVE TAX: A regressive tax takes a small portion of income as
income rises in order words, as income increases, the amount of tax paid
decreases. PROPORTIONAL TAX SYSTEM:
proportional taxation is the income earners.
Both rich and poor. TAX EVASION:
Tax evasion is a deliberate attempt not pay tax. TAX AVOIDANCE: Tax avoidance
is an attempt to exploit the flow or loopholes in the tax with a view to not
paying the required tax. TAX INCIDENCE: Tax incidence is the impact of a tax
and where the burden of tax finally rests.
EQUITY: The principle of equity demand that equals be treated
equally. CERTAINTY: The tax payers
should know when there are due for payment.
ECONOMY: The cost of collecting the tax should be small in relation to
the revenue to be generated by the tax.
NEUTRALITY: By neutrality, we mean that a tax system should not distort
relative prices in an economy. ADEQUACY:
By adequacy we mean that a good tax system be capable of providing the flow of
funds necessary for government operation.
FISCAL POLICY: Fiscal policy is the use of government tax expenditure
policies to influence the level of Economy activity. GOVERNMENT REVENUE: Is the income, which
accrues to the government.
imposed by the government on individual and business firm and paid by them to
the government. INCOME TAX: This is the
tax on the income of individual after all allowances have been deducated. COMPANY TAX: This is the on the property of a
company. PROPERTY TAX: This is the tax
on the property value of an asset. POLL
TAX: A poll tax is a flat rate levied on every individual in a country. DIRECT TAX: A direct tax is a tax levied
directly on the income of individual and business firm. INDIRECT TAX: These are taxes levied on goods
and services. CUSTOM DUTIES: These are
taxes levied on goods brought into the country.
EXPORT DUTIES: These are taxes levied on good brought into the
country. PURCHASE TAX: This is an
advolarem tax. (i.e. based on the value of commodities generally collected at
the whole sale stage. SALE TAX: It is a tax levied and collected
either at a whole sale or retail level.
LICENSE: The use of radio and television set and the sale of drinks
attract taxes in the from of license which have to be obtained. DEATH DUTIES: Taxes on the properties of the
deceased. PROGRESSIVE TAX SYSTEM: A tax is said to be progressive if the rate
increases as the size of income increases.
REGRESSIVE TAX: A regressive tax takes a small portion of income as
income rises in order words, as income increases, the amount of tax paid
decreases. PROPORTIONAL TAX SYSTEM:
proportional taxation is the income earners.
Both rich and poor. TAX EVASION:
Tax evasion is a deliberate attempt not pay tax. TAX AVOIDANCE: Tax avoidance
is an attempt to exploit the flow or loopholes in the tax with a view to not
paying the required tax. TAX INCIDENCE: Tax incidence is the impact of a tax
and where the burden of tax finally rests.
EQUITY: The principle of equity demand that equals be treated
equally. CERTAINTY: The tax payers
should know when there are due for payment.
ECONOMY: The cost of collecting the tax should be small in relation to
the revenue to be generated by the tax.
NEUTRALITY: By neutrality, we mean that a tax system should not distort
relative prices in an economy. ADEQUACY:
By adequacy we mean that a good tax system be capable of providing the flow of
funds necessary for government operation.
FISCAL POLICY: Fiscal policy is the use of government tax expenditure
policies to influence the level of Economy activity. GOVERNMENT REVENUE: Is the income, which
accrues to the government.
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