ABSTRACT
The research
provides a conceptual and analytical appraisal of tax reforms and
revenue generation. The study seek to determine the effectiveness of tax reform
policy toward achieving high revenue to government and public utility. It analyses
the concept of taxation, types and significance.
INTRODUCTION
The tax system in Nigeria is made up of the tax policy, the
tax laws and the tax administration. All of these are expected to work together
in order to achieve the economic goal of the nation. According to the
Presidential Committee on National tax policy (2008), the central objective of
the Nigerian tax system is to contribute to the well being of all Nigerians
directly through improved policy formulation and indirectly though appropriate
utilization of tax revenue generated for the benefit of the people. In
generating revenue to achieve this goal, the tax system is expected to minimize
distortion in the economy. Other expectations of the Nigerian tax system
according to the Presidential Committee on National tax policy (2008) include;
·
Encourage
economic growth and development.
·
Generate
stable revenue or resources needed by government to accomplish loadable
projects and or investment for the benefit of the people
·
Provide
economic stabilization.
·
To
pursue fairness and distributive equity
·
Correction
of market failure and imperfection.
In an attempt to fulfill the above expectation,
the national tax policy is expected to be in compliance with the principle of
taxation, the lubricant to effective tax system. The Nigerian tax system has
been flawed by what is termed multiplicity of tax and collecting entities at
the three tiers of government levels – Federal, State and Local government
(Ahunwan, 2009).
CHAPTER 1
1.1
BACKGROUND
OF THE STUDY
According
to the report of the presidential committee on National Tax policy (2008), “The National tax policy provides a set of
rules, modus operandi and guidance to which all stakeholders in the tax system
must subscribe”. Tax policy formulation in Nigeria is the responsibility
of the Federal inland Revenue Services (FIRS), Customs, Nigerian National
Petroleum Corporation (NNPC), National Population Commission (NPC), and other
agencies but under the guidance of the National Assembly i.e. the law making
body in Nigeria (Presidential committee on National tax policy, 2008). Suffice
it to say that if there must be any effective implementation of the Nigerian
tax system or attainment of its goal, the use of the national tax policy
document remain absolutely essential. According to the Presidential Committee
on tax policy (2008), “Nigeria needs a tax policy which does not only describe
the set of guiding rules and principles, but also provide a stable point of
reference for all the stakeholders in the country and upon which they can be
held accountable. James and Nobes (2008) decried the inability of tax policy to
meet up with efficiency and equity criteria against which it is being judged.
It was further noted that tax policy is continually subjected to pressure and
changes which most time does not guarantee outcome that are in line with the
overall goal (James and Nobes 2008). Unfortunately, most policy changes in
Nigeria are without adequate consideration of the taxpayers, administrative
arrangement and cost plus the existing taxes. This has in no small measure
hindered the effective implementation and goal congruence of the nation’s tax
system. Citing (Bird and Oldman 1990), James and Nobes (2008) stated as follows
“the best approach to reforming taxes
is one that takes into account taxation theory, empirical evidence and
political and administrative realities and blend them with good dose of local
knowledge and a sound appraisal of the current macroeconomics and international
situation to produce a feasible set of proposals sufficiently attractive to be
implemented and sufficiently robust to withstand changing times, with reason
and still produce beneficial results”.The research seek to investigate the
nature of tax reforms and its impact on revenue generation.
1.2
STATEMENT OF THE PROBLEM
The problem confronting this research is to
determine the nature of tax reforms and its impact on revenue generation in
Nigeria, applying a longitudinal analysis.
1.3 RESEARCH QUESTION
1 What
constitute tax reforms in Nigeria?
2
What is the effectiveness of tax
reform towards revenue generation in Nigeria?
1.4
OBJECTIVE OF THE STUDY
1
To determine the
nature of tax reform in Nigeria
2
To determine the
effectiveness of tax reform policy towards revenue
generation to government
1.5
SIGNIFICANCE
OF THE STUDY
The
study shall analyze tax reform policy and determine its effectiveness towards
revenue generation to government.
It shall also serve
as a source of information on issues of tax reforms in Nigeria
1.6
STATEMENT
OF HYPOTHESIS
1 H0 Tax
revenue generation in Nigeria is high
H1 Tax revenue generation in Nigeria is low
2 H0
challenges to tax revenue generation in
Nigeria is low
H1 Challenges
to tax revenue generation in Nigeria is high
3 H0 The
impact of tax reform on revenue generation is low
H1 The
impact of tax reform on revenue generation is high
1.7
SCOPE
OF THE STUDY
The study focuses on the appraisal of tax
reforms and its impact on revenue generation using a longitudinal analysis
1.8
DEFINITION
OF TERMS.
TAX POLICY
REFORM
According
to the report of the presidential committee on National Tax policy (2008), “The National tax policy provides a set of
rules, modus operandi and guidance to which all stakeholders in the tax system
must subscribe”. Tax policy formulation in Nigeria is the responsibility
of the Federal inland Revenue Services (FIRS), Customs, Nigerian National
Petroleum Corporation (NNPC), National Population Commission (NPC), and other
agencies but under the guidance of the National Assembly i.e. the law making
body in Nigeria (Presidential committee on National tax policy, 2008). Suffice
it to say that if there must be any effective implementation of the Nigerian
tax system or attainment of its goal, the use of the national tax policy
document remain absolutely essential. According to the Presidential Committee
on tax policy (2008), “Nigeria needs a tax policy which does not only describe
the set of guiding rules and principles, but also provide a stable point of
reference for all the stakeholders in the country and upon which they can be
held accountable.
TAX
Taxation
has been defined as a general concept for devices used by government to extract
money or other valuables from members of the community and organization by use
of law. It is a levy charged by government either central, state, or local
government on income, property, commodities and services.