INTRODUCTION 1.1 Background of the study
The political, economic and social development of any country depends on the amount of revenue generated for the provision of infrastructure in that given country. However, one means of generating the amount of revenue for providing the needed infrastructure is through a well structured tax system (ogbona and ebimobewei, 2012). The vital role that taxation play in an economy cannot be overemphasized. Tax is a compulsory levy imposed by government or its agent on her citizens in order to raise revenue for the funding of economic activities. Nkoro and worlu, 2012 defined Tax as a fee charged or levied by a government on a product, income, or activity. If it is levied directly on …show more content…
* There is positive relationship between indirect tax and economic growth. * There is an inverse relationship between lagged tax revenue and economic growth.
1.5 SIGNIFICANCE OF THE STUDY
The study would provide an econometric basis upon which to examine the effect of tax revenue on Nigeria’s economic growth. It will empirically highlight the effect of various form of tax revenue on the growth or otherwise of the Nigerian economy, thus the study would be of relevance to the government, individuals and researchers in similar field of study. 1.6 SCOPE AND METHODOLOGY
The scope of this study shall cover the revenue generation from taxes and tax reforms in Nigeria over the years to date. However, the main focus of this study is an x-ray of the effects of tax revenue on the growth of Nigerian economy. The study will focus on the Nigerian economy from 1990 to 2013.
Methodology is the specification of procedures for collecting and analyzing the data necessary to help solve the problem at hand so that the difference between the cost of obtaining the various level of accuracy and the expected value of information associated with each level of accuracy is maximized.
Secondary data shall be used for this study. The relevant data to be used would
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Whilst William McBride, chief economist for Tax Foundation website, sided with tax cut policy saying that to strengthen the financial state, “we should lower taxes on the earnings of capital,” “workers and the businesses that hire them,” Chye-ching Huang and Nathaniel Frentz, both are senior Tax Policy analysts, completely debunked the evidence McBride provided to support his argument, which includes the review of twenty-three among twenty-six studies he thought to advocate the idea. Indeed, as one conducts research, regardless of what sources it comes from, agreement over tax issue should never be found as a unanimous answer. One of the reasons why it is so difficult to reach a definite conclusion rests on the fact that although some statistics may show economic growth was in step with tax cut, correlation does not mean causation: just as ice-cream sale and murder rate increase during summer time, it is baseless to assume that higher ice-cream consumption leads to higher odds for crime. Moreover, because there is a great amount of research has been done on taxes, different interpretations from these data are understandable. Before concluding that “nearly every empirical study of taxes and economic growth published in a peer reviewed academic journal” finds cutting taxes improves the financial status quo, thus, people need to consider
What happens to the economy when the government raises or lowers taxes? Lots of people in America do not understand exactly what happens to the economy when the government raises or lowers taxes. In this paper I am going to address that question as well as a few other things such as: Describing the effect on net personal income when the government raises taxes and when the government lowers taxes. Describing how the Gross Domestic Product (GDP) is affected by higher taxes and lower taxes. I will also identify what other economic factors are affected when taxes are raised or
There is an ominous shadow hanging over America consuming its wealth, and dividing its people over the promise of fair and equal treatment. American debt has no rival in the modern world, and it continues to spiral out of control as politicians’ debate solutions that would bring it under control. To manage this debt citizens are burdened with a federal income tax system that is inefficient, discriminatory and cumbersome to the American people. Since the federal income tax was created the cost to comply with it has grown into an economic nightmare for the American economy, and its people. Seventy thousand pages tax codes and hundreds of tax forms are required to calculate taxes, increasing
It has also argued that growth can also be enhanced, by improving the design of individual taxes. In some cases, such as the reduction of corporate taxes and the top rate of personal income tax, it is unlikely that these growth-enhancing changes will help the recovery from the current crisis. At the same time, there are tax changes that appear to be bad for growth, such as reductions in sales taxes (particularly if they take the form of exemptions and reductions) and property taxes that would do little to speed recovery. The tax change that shows the most promise in terms of both increased growth and economic recovery is the reduction of income taxes of those on low incomes. This would stimulate demand, increase work incentives and reduce income inequality. The authors display that the dependence of both growth and tax policy on initial income help explain why it is difficult to isolate the effects of tax policy on growth.
With an increase in collection of taxes, there is only growth and stimulation in accelerating social and economic development. With an improved and functioning non-corrupt tax administration the increase of money into the government budget can help to utilize other concerns in Azerbaijan.
All over the world, governments undertake huge public expenditure on behalf of their citizens for the provision of basic amenities and other social services. To meet up with these responsibilities, governments thus require substantial amount of funds. Among the various sources from which can generate income, taxes are the most important and most reliable; contributing much more than any other source. A tax therefore, is a compulsory levy imposed by the government on the income, profit or wealth of an individual, family, community, Taxation is the inherent power of the state, exercised through the legislature, to impose financial burdens upon subject within its jurisdiction for the purpose of raising revenues to carry out the legitimate duties of government (Kenned & John, 2014)
These weak macroeconomic fundamentals influenced the then government’s decision to implement a series of strenuous public policies; with the goal to place Ghana back on sound economic and social footing. I recall waking up one early morning to prepare for school. But I realized the “airwaves” were poised with anger. Most people in my neighborhood were glued to their radio sets, waiting impatiently on the government to confirm the rumors, circulating in the country about its decision to scrap the old tax policy and replace it with a new one; the Value Added Tax. Around midday, the government finally let the cat out of the bag and outlined in detail the various segments of the new tax policy. This policy mandates the government to impose taxes on consumer goods and services at all stages of production and distribution. Businesses can pass along a sizable percentage of the
Are you aware that taxes have been around since the Ancient Egyptian, Roman, and Mesopotamian times as early as 3000 B.C.? (“Taxes in the Ancient World” U. Penn Almanac). Taxes are a crucial part of society’s economic functions as a whole. Taxes help us generate money to help build new roads, provide us with protection through services such as law enforcement, and help improve public education institutions. In other words, taxes help the United States create value for its citizens. As we all are aware, no system is perfect and there are times when our economy isn’t doing so well and also times when it’s really booming. The main subjects of discussion are: tax morale, wealth distribution and taxes, tax loopholes, off shore tax evasion, and possible reformations. What this paper analyzes and discusses is current economic issues that involve taxes and possible reformations to correct them.
Taxation is a scheme where one or more individual or a company or a group of companies or similar legal entities paying certain amount of money from income, product or service to the government to progress the country?s infrastructure. The intention of imposition of tax to the residents, either individual or company, by the administration is to help government financially so that government can pursue development task for the country. However, the amount of tax will always depend on the financial stability of a country. To make the taxation scheme more effective, the taxation system and its law necessity to be more effective. Depending on country?s circumstances, taxation system is also very to one jurisdiction to another. However, in this essay, the discussion will focus on the two jurisdictions namely Australia and Bangladesh and the discussion will concern specifically to the function of the two authority to collect tax from two jurisdiction, different number using in two different jurisdiction to identify taxpayer, sources of income tax between this two jurisdiction, accounting system among them, the other sources (apart from income tax) of tax, the system to bring action against the tax authority among the two jurisdiction and
We have seen in the past tax incentives stimulate growth through saving, investment, and work; however, deciding the best approach will be debated by economists and politicians. Two views for tax incentives are the supply-side theory and the Keynesian theory. Both of these theories end up
The amount of tax levied on the citizens mainly determines the growth rate of a country. Lower tax collection from the citizens will ensure that the growth rate will be decreased. An illustration is a country such as Denmark, which keeps its taxes high hence increasing the growth of its economy. Massive tax cuts, on the other hand, does not result in economic growth.
The response to revenue to a tax rate change will be reflected on depending on what the tax system is in place at that specific moment as well as the time period, the movement of it inside the underground activities, the levels of tax rate that is already in place, the prevalence of legal and accounting-driven tax loopholes, and the proclivities of the productive factor.
In order to correct pitfalls in previous studies this research work will have to include some important variables which previous studies have neglected in their research variables such as the contribution of oil export, total labour-force and gross fixed capital formation in Nigeria on economic growth. This study therefore will cover these lapses by focusing on Nigeria only. However, this study will compare the magnitude and direction of
The primary purpose of the tax system is to collect the revenue needed to fund the operations of the union government including its promises and commitments. Tax revenues may not fully match the government spending each year but over time, the union government needs to be able to raise sufficient revenue to cover its current and expected financial obligations. Decisions about spending and the role of government have a direct impact on the governments ultimate revenue needs (Walker 2005). Tax reform invariably forms a key component of structural adjustment programmes of developing countries and for good reasons. The most important reason is that when a country undertakes to reform its economic structure to overcome chronic macro economic imbalances and remove impediments to growth, it is imperative to bring the tax system too in line with the basic thrust of the structural reforms versus enhancing efficiency in the allocation and use of resources by promoting competition and avoiding needless interference with market forces (Amaresh Bagchi). A basic tenet that has guided our tax reforms, as those of many other countries in recent years has been ‘widens the base, reduce the rates’. The aims of equity, efficiency and simplicity are served best it is argued, when the base of the tax is comprehensive be it income or consumption. In a regressive tax system lower income tax payers pay larger percentage of income in
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.