The Role of Taxation in Economic Development: A Case Study of the Board of Internal Revenues in Uyo Local Government Area, Akwa Ibom State
TABLE OF CONTENTS
Cover Page. ……………………………..i
Title page . . . . . . . . . . . . . . . . . . . . . . . . . . .ii
Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
Dedication. . . . . . . . . . . . . . . . . . . . . . . . . . . iii
Acknowledgment . . . . . . . . . . . . . . . . . . . . . . . iv
Abstract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . vi
CHAPTER ONE: INTRODUCTION
1.1 The Background of the study
1.2 Statement of the problem
1.3 Objectives of the Study
1.4 Research Questions
1.5 Research Hypothesis
1.6 Significance of the Study
1.7 Scope of the Study
1.8 Limitations of the Study
1.9 Definition of Terms
The Role of Taxation in Economic Development
CHAPTER ONE: INTRODUCTION
1.1 Background to the Study
Taxation has a long history, dating back to ancient times when kings levied taxes on their subjects for the benefit of the people. In Nigeria, the imposition of taxes can be traced back to the colonial government when Lord Fredrick Lugard introduced taxes to generate revenue for his administration. However, this policy was met with resistance from the citizens, leading to riots in 1929.
Taxation serves as a means for the government to generate revenue and implement various functions for the citizens of a state. In Akwa Ibom State, taxation plays a role in wealth redistribution, economic growth, employment generation, price stability, and other aspects. Throughout history, taxation has been used to improve the financial situation of states and countries. The tax collected contributes to government revenue and helps discourage the consumption of certain goods and services. Furthermore, taxation enables the implementation of government plans by generating revenue, promoting investment, and encouraging sectors like agriculture and industries.
Apere (2003) highlights that taxation is a microeconomic and fiscal policy instrument used to transfer resources from the private to the public sector to achieve economic and social goals. It is a tool for measuring, assessing, and controlling the informal sector that dominates developing economies. Government requires funds to carry out its responsibilities, which include administration, maintenance of law and order, defense, and the provision of social services such as education and healthcare. Taxation plays a crucial role in financing these functions and reducing income inequality.
In Akwa Ibom State, resources are acquired through various means, including taxes, borrowing, credit creation, sales of goods and services, and grants. Taxation is a significant tool for economic development as it enables the government to raise funds for public goods and make transfer payments. This research focuses on examining taxation as a tool for economic development, specifically looking at the Board of Internal Revenue Service in Uyo.
1.2 STATEMENT OF THE PROBLEM
Considering the importance of taxation for government and economic development, the research problem addressed in this study is the consequences of neglecting taxes. Can the government of Akwa Ibom State adequately finance public goods and cover its expenses to achieve optimal economic growth? Recently, tax revenue has been low, resulting in limited physical development and a lack of impact on the poor. The problems to be addressed in this research work include inadequate tax personnel, fraudulent activities of tax collectors, and a lack of taxpayer understanding regarding the importance of paying taxes.
1.3 OBJECTIVES OF THE STUDY
This study aims to achieve the following objectives:
1. To examine the significance of taxation and its impact in Akwa Ibom State.
2. To assess the contributions of taxes toward enhancing the economic development and growth of the state.
3. To identify the problems that may affect the successful operation of the tax system in the state.
4. To provide recommendations for the effective and efficient operation of the tax system in the state.
1.4 RESEARCH QUESTIONS
The research will address the following questions:
i. Does a decrease in government revenue have any consequences for the economic growth and development of Akwa Ibom State?
ii. Does taxation have a significant effect on the economic development of Akwa Ibom State?
iii. What are the benefits of taxation?
iv. Does taxation impact the development of an economy through the proper use of its tools?
1.5 RESEARCH HYPOTHESES
The following hypotheses are formulated to guide the study:
Hypothesis 1:
Null Hypothesis (HO): Taxation as a tool does not have a significant impact on economic development in Akwa Ibom State.
Alternative Hypothesis (HI): Taxation serves as a significant tool in economic development in Akwa Ibom State.
Hypothesis 2:Null…… Get full project topic reaching out or consulting us
DEFINITION OF TERMS
To avoid doubt in the minds of readers, the following terms are defined as they reflect their application in the study.
TAXATION: This is the process of levying and collection of tax from taxable person. (Soyode & Kayola 2006).
It is a compulsory financial contribution imposed by the government to individuals and cooperate bodies. Also, taxation is a major instrument of social and economic policies whose payment are not voluntary but enforced contribution exact to legislative authority.
Tax can be defined as compulsory transfer resources from private to the public sector without reference to specific benefit received so as to accomplish some of the nation’s economic and social objectives.
TAX INCIDENCE: The incidence of tax measures the final tax burden on difficult people once it allow for all effects of the tax. The ultimate effect of a tax can be very different from it apparent effect.
ECONOMIC DEVELOPMENT: This is defined as an increase in gross national product or income per capital that is necessary to sustain a nation’s standard of living.
It is the sustained, concerted actions of the policy makers and communities that promote the standard of living and economic health of a specific area (Sheffrin, 2013). Clement 2013 also defined economic development as the quantitative and qualitative changes in the economic to enhance the living standard of the people.
DEVELOPMENT: Development is the process of economic and social transformation that is based on complex and cultural environmental factors and their interaction.
TAX EVASION: This is the deliberate and wilful practice of not disclosing full taxable income so as to pay less tax or it is a contravention of the tax laws whereby a taxable person neglect to pay the due or reduces tax liability by making fraudulent or untrue claims on the income tax form (Soyode & Kayola 2006).
Also, tax evasion is an illegal act or a deliberate act by the tax payer to illegally reduce or totally escaped his\her tax liabilities and relevant tax account, withholding tax deductions at source by employers or tax returns and failure to pay tax as at wen due.
TAX AVOIDANCE: This refers to a legal means by which a tax payer legally minimized his tax liabilities through carefully tax planning of tax payer affairs of through taking advantage of loophole existing in tax laws and regulations.
Tax avoidance has been defined as the arrangement of tax payers affairs using the tax shelter in the laws, and avoiding tax traps in the laws so as to pay less tax than he or she would otherwise pay( Soyode & Kayode 2006).
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