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Tax System as a Tool of Promoting Economic Growth in Nigeria

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Tax System as a Tool of Promoting Economic Growth in Nigeria.

INTRODUCTION

  • Background to the study.

Since the existence of human beings on earth after the creation phase, with the resources man, found himself within which was put under his care, it is assumed that the creator put all things there so that man and his offspring might benefit from his creation.

During this time in the world, all human beings were equal, economically speaking and all were living an average life by exchanging goods and services for a living.

As evolution set in, man needed to be ruled by leaders of their own kind and this brought about the emergence of kings and queens.

The people under each king or queen were expected to pay periodically, a kind of tax directly, either by giving the products they cultivated or by providing communal services (Ademola, 1996).

The emergence of kings and queens as rulers gave birth to social stratification in the society thereby dividing the society into two classes which are, the rich class and the poor class.

These classes will share a similar lifestyle, which to some degree would distinguish them from members of other social strata (Haralambos and Holborn, 2004).

Social stratification set in gradually, civilization also paved its way into the society, and soon it became clear that the human society will always be a composition of the have‟s who are the rich, and they have-not‟s who are the poor.

The era of kingdoms was slowly fading away, due to the advent of civilization, and governments began to be established. When governments began to be established, the political systems were also going through rapid change at the time and so was the economic system also.

The poor were dying off because of poverty and hunger and also due to their status in the society, they also had no access to social amenities such as health facilities, security, education e.t.c.

These were the dark days of humanity because there was a very wide gap between the rich and the poor this gap was ever-increasing because the rich were getting richer while the poor were getting poorer. Something had to be done urgently.

The emerging governments of countries in order to bridge the gap between the rich and the poor had to put in place a tax system that will enable those who have to provide for those 2 who do not have through the contributions of those who have.

The contributions collected by the government from those who have was to be used to provide for social amenities such as security, health, education, employment, e.t.c. which are to be enjoyed by all in the society whether rich or poor.

The system provided by the emerging governments in countries as earlier mentioned, today it is referred to as taxation.

Taxation is a compulsory levy imposed on a subject or upon his property by the government to provide security, social amenities, and other amenities for the well-being of the society as a whole. Today, taxation has become an instrument of economic growth and development it is because, over the years, taxation has become a key factor in shaping the fiscal, monetary, and investment policies in the government.

How? this is true because the choices and rates of taxes chosen by a country depending on the long-term objectives of the government of the country. Economic growth is defined as a process whereby the real per capita income of a country increases over a long period of time (M.L. Jighan, 2003).

Economic growth is measured by the increase in the number of goods and services produced in a country. Thus growth occurs when an economy‟s productive capacity increases to produce more goods and services. Furthermore, economic growth implies raising the standard of living of the people and reducing inequalities of the income distribution.

Economic development is when there is increased sustained economic growth for a continuous successive period of time. In Nigeria, the constitution has vested the sole right to impose a tax on the federal government of Nigeria. The tax system of Nigeria comprises three components namely the tax policy, the tax laws, and the tax administration.

The function of tax administration is shared between the three tiers of government which are the federal government, the state government, and the local government. According to the Nigerian constitution, the federal government is the center of power of the three tiers of government.

In each tier of government, it is expected that each government uses the tax system available to it for the primary aim of revenue generation so as to finance the expenditure of the public sector and provide good infrastructure for the people thereby increasing their standard of living, which will lead to the economic growth of the country and in the long-run economic development

REFERENCES

Abiola & Asiweh. (2012). Impact of Tax Administration on Government Revenue in a Developing Economy- A Case Study of Nigeria; International Journal of Business and Social Science; Vol. 3(8)
Adams, R.A. (2006). Public Sector Accounting and Finance. Lagos: Corporate Publishers Ventures
Ademola, A.B. (2004). Nigerian Tax Prudence; Book One. Akure: Elsie Publishers Ltd. Aguolu, o (1999), Taxation and tax management in Nigeria, Enugu: Meridian associates.
Ariwodula, J.A. (1998), Personal Income Taxation in Nigeria including capital gains tax, Lagos: JAA Nigeria.
Ariyo, A . (1997), „Productivity of the Nigerian tax system: 1970-1990”. African Economic research consortium (AERC)” Research paper 67, Nairobi Kenya: AERC, Available from; http://www.aerc africa.org/documents/ RP67.PDF.
ATSWA study pack. (n.d). Preparing Tax Computations and Returns, Lagos Ayua, L.A. (1999), The Nigerian Tax Law, Ibadan: Spectrum Law publishing.
Ayodele, O. (2006). “Tax Policy Reform in Nigeria”, World Institute for Developmental Economic Research (WIDER) Research Paper, Vol. 2006/03. Finland: Unit-WIDER. Retrieved from : http//www.wider.unu.edu/publications/working papers/research papers/working papers/2006/enGB/2000 03/.
Balyewu, F.A. (2000). Nigerian Taxation: A Practical Approach, Egbe Kogi: Bhoti international publishing ltd.
Central Bank of Nigeria. (2011). CBN Annual report, Nigeria.
Central Bank of Nigeria. (2013), Draft Guidelines for The Payment Of All Forms Of Taxes At All Levels Of Government; Banking And Payment System Department Abuja.
Ekeocha et al. (2012). Revenue Implications of The Nigerian Tax System; Journal of Economics and Sustainable development, Vol.3(8)
Enahoro & Olabisi. (2012). Tax Administration And Revenue Generation of Lagos state Government, Nigeria; Research Journal of Finance And Accounting, Vol 3(5)
Farayole, O.O. (1987). Guide to Nigerian Taxes, Lagos: All crowns Nig. Ltd.

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