Importance Of Tax In Nigeria

The issues of taxation

The tax system was created as a way for the government to raise revenue and provide services on the behalf of those who pay those taxes. The burden of the level of taxes paid by the citizen seems to continue to increase, but the purpose of tax exemptions, according to the Louisiana Budget Project, is to encourage certain activities-such as economic development, the hiring and training of the unemployed, and the development of low-income housing. The

Ghana finds it very difficult to implement its fiscal policy as it does not have an appropriate infrastructure for income tax analysis and collection. Most of the population work in an unofficial industry which means they are paid in cash, this in turn means the government cannot keep accurate records of the citizens and therefore cannot ‘extract’ the right amount of income tax from the people when implementing fiscal policy. This means the policy will be less effective. 6.

Perry & Christensen (2015) provide insight on the design and administration of a revenue system, as well as how it is evaluated. A revenue system is a collection of sources that is used by the government that are extracted through the means of tax and charges. Designing a revenue system is not merely created from scratch; it is an older system that has been modified to comply with and be accepted by society. These systems have been trending since the beginning of socioeconomic development and continue to evolve. Revenue systems are evaluated through a set of criteria; economic efficiency, equity, feasibility, and adequacy. It is noted that transparency is also part of the criteria, but it is a separate criterion in itself. Research and evidence examine the set of criteria by focusing on the income tax and how it has been the main source of revenue for the US Federal government. There have been many innovations in the technology of tax collection that have been implemented in the US, and have also been adopted globally by both developed and developing countries. Efforts to improve current systems and policies are examined based on the set used to evaluate the revenue system.

All the tax-related matters should be handled with utmost sincerity and carefulness. The government should take strict action to it and stick in the favor of citizens of the country who are honestly paying high taxes. In any way, the public should not feel cheated and disappointed.

Income tax is considered to be one of the greatest ways that a country amasses wealth through known means from the public in order to use the funds for the benefit and welfare of the community. Since a very long time, there have been many discussions and debates on the way the finds collected for income tax have been spend. There are many who think that there is a lot of mismanagement and feel that the amount of the actual money spent on welfare of the community is far less that what gets collected by the country.

Politics is the process in which negotiation and resistance is utilized to establish a stable society. In contrast, the current United States tax system fails to form such solid grounds. Without such a complex system, anarchy and chaos will overrule the goal of fairness that is favorable to people. Taxation is a branch of politics that is distorted in some ways in which it does not satisfy many people’s needs. Although a government is designed to run an organized society and meet the needs of citizens, it does not always do a great job. Many people feel that their place in the financial world grants them immunity from excessive taxes while others feel they are being hurt by such an unequal tax burden. The purpose of taxes is to benefit society as a whole and keep the government running, but it is not working properly and efficiently. People’s various situations make it difficult to implement the current tax system. Taxation has long been deliberated, and the issue holds many points, such as income, a person’s age, and where they live, these circumstances are unequal and unfair to many people.

Tax system is a legal system of imposing and collecting taxes from the citizens of the country. As it has been stated by Albert Einstein, the hardest task in the world is to understand the tax system of a country. The United States’ tax system is so complicated that its tax code contains almost 3 million words and 6,000 pages. Moreover, the taxes implied by city and state governments add more complexity to the federal taxation system. In this case, we do not need to understand the complexity of tax code system in order to get acquainted with the significant role of taxes in American society.

Nigeria is governed by a federal system hence its fiscal operations also adhere to the same principle, a fact which has serious implications on how the tax system is managed. The country’s tax system is lopsided, and dominated by oil revenue. It is also characterized by unnecessarily complex, distortionary and largely inequitable taxation laws that have limited application in the informal sector that dominates the economy.

* Capital transfer tax: This tax is imposed on the capital value of properties transferred. This tax was introduced in nigeria in 1979 via the federal government official gazette No. 18, vol. 66. The law was enacted to curb embezzlement of public funds by private individuals since the bulk of any money stolen will be subjected to heavy taxation when the estate is to be transferred.

At different points in time in Nigeria, various issues have surrounded VAT administration since the enactment of the Value Added Tax Act, 1993 (later referred to as the “Act”) and the subsequent Value Added Tax (Amendment) Act, 2007, especially in relation to whether services rendered by a Non-Resident Company (NRC) to a Nigerian company are subject to VAT.

Taxation systems are usually modeled in such a way that they take into consideration the social welfare of the citizens. The government and other policy makers have the responsibility of ensuring that the system takes into account the needs of the citizens. The bottom line is that taxation should foster equal distribution of resources. The rate of taxation is usually arrived at after several considerations have been made. The rates are not fixed as they depend on the various economic changes. The issue of how taxation should be distributed among the different economic classes is yet to be addressed.

Given the issues raised above, this research seeks to examine the effect of government expenditure on economic growth in Nigeria. The research work is organized as follows. Chapter 1 is the introduction, while chapter 2 contains literature review and theoretical framework. Chapter 3 consists of methodology and

Nigeria has a population of around 180 million, making it the most populous country in Africa. Nigeria is located in a region with tropical climate and that can grow variety of crops. With their numerous resources and growing technology they have been able to have positive economic advancement. Nigeria has had improvements in five of the ten economic freedoms. This includes Freedom of corruption, labor freedom, and management of government spending ("Nigeria." Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption.). Nevertheless these large improvements in their economy has not brought human development, where most Nigerians live under the poverty line. This paper will focus on why Nigeria has not been able to use their economic prosperity in the sector of human development, this includes standard of living, health, safety, and basic necessity one needs to live a stable life. We will compare it to the state of Ghana whose economy has also flourished but has been success in human development.

I’ve summed up the introduction of Taxation to these slight words. Taxation is defined as a way that the government able to generate or collect revenue from the citizen of one’s nation through different sources. As what I’ve learned from Taxation course that there are two types of taxation, direct which are paid by the taxpayer directly to the government, and indirect which are collected by an intermediary (like a retail store) from the consumer. The intermediary who will file the tax return later and forward the amount of the money to the government with the return. This tax is applicable to organizations and individuals. In this reflection, I would like to highlight what I learned of business and individual taxation, the experience on working with a group for the project and what challenges I faced and how I was able to get past.